Krisanne Company reports the following operating results for the month of June.

To increase net income, management is considering reducing the selling price by \(10 \%\), with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by \(25 \%\).
Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars,

(a) assuming no changes to sales price or costs, and

(b) assuming changes to sales price and volume as described above.

(c) Comment on your findings.

Transcribed Image Text:

KRISANNE COMPANY CVP Income Statement For the Month Ended June 30, 2010 Sales (5,000 units) Variable costs Contribution margin Fixed expenses Net income Total Per Unit $300,000 $60 180,000 36 120,000 $24 100,000 $ 20,000