Current operating income for Bay Area Cycles Co. is $74,000. Selling price per unit is $120, the

Question:

Current operating income for Bay Area Cycles Co. is $74,000. Selling price per unit is $120, the contribution margin ratio is 30%, and fixed expense is $250,000.

Required:
Calculate Bay Area Cycle’s per unit variable expense and contribution margin. How many units are currently being sold? How many additional unit sales would be necessary to achieve operating income of $110,000?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...

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