You are currently trying to decide between two cost structures for your business: one that has a greater proportion of short-term fixed costs and another that is more heavily weighted to variable costs. Estimated revenue and cost data for each alternative are as follows:

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Selling price per unit Variable cost per unit Short-term fixed costs per year Cost Structure Alternative 2 $ 100 85 45,000 Alternative 1 $ 100 90 40,000 Selling price per unit Variable cost per unit Short-term fixed costs per year Cost Structure Alternative 2 $ 100 85 45,000 Alternative 1 $ 100 90 40,000

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Answer To analyze the two cost structures and determine which one is more suitable we need to calculate the contribution margin and the breakeven poin... View the full answer