Manchester LTD manufactures FIFA computer games. Last year Manchester sold 5000 games at $500 each. The...

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Manchester LTD manufactures FIFA computer games. Last year Manchester sold 5000 games at $500 each. The varible cost of each game was $300 and the firms fixed cost totaled to $500 000 per year. In an attempt to improve its product the company is considering replacing a component part that has a costr of $100 with a new, improved part costing $150 per unit in the coming year. Required a. What was Manchester contribution margin ratio last year? b. What was Manchester's breakeven point in number of units last year? c. What will the new breakeven point in number of units be if the suggested changes is not made in the coming year, hence, fixed cost increase by 10% d. How many computer games would have had to sell last year to earn a target net profit of $1,000,000? e. If Manchester holds, the sales price fixed and makes the suggested changes how many units must be sold in the coming year to eartna targeted net profit of $1,000,000. Manchester LTD manufactures FIFA computer games. Last year Manchester sold 5000 games at $500 each. The varible cost of each game was $300 and the firms fixed cost totaled to $500 000 per year. In an attempt to improve its product the company is considering replacing a component part that has a costr of $100 with a new, improved part costing $150 per unit in the coming year. Required a. What was Manchester contribution margin ratio last year? b. What was Manchester's breakeven point in number of units last year? c. What will the new breakeven point in number of units be if the suggested changes is not made in the coming year, hence, fixed cost increase by 10% d. How many computer games would have had to sell last year to earn a target net profit of $1,000,000? e. If Manchester holds, the sales price fixed and makes the suggested changes how many units must be sold in the coming year to eartna targeted net profit of $1,000,000.

Answer rating: 100% (QA)

a Manchesters contribution margin per unit can be calculated as the difference between the selling price and the variable cost per unit Contribution m... View the full answer