Bellbird Ltd developed the following information regarding its product: Sales Price $95/Unit Variable Costs $67/Unit Contribution Margin $28/Unit Total Fixed Costs $1,325,000
Required:
Answer the following independent questions and show computations using the Contribution Margin technique to support your answers (round your answers up or down to the nearest dollar/unit):
a) How many units must be sold to break even?
b) What is the total sale (in units and dollars) that must be generated for the company to earn a profit of $70,000?
c) If the company is presently selling 75,000 units, but plans to spend an additional $140,000 on an advertising program, how many additional units must the company sell to earn the same net profit it is now making?
d) Using the original data in the problem, calculate a new breakeven point in units if the unit sales price is increased 20%, unit variable costs is increased by 10%, and total fixed costs are increased by $200,000.