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In 2010, Hadicke Company had a break-even point of $350,000 based on a selling price of $7 per unit and

Question:

In 2010, Hadicke Company had a break-even point of $350,000 based on a selling price of $7 per unit and fixed costs of $105,000. In 2011, the selling price and the variable cost per unit did not change, but the break-even point increased to $420,000.


Instructions

(a) Compute the variable cost per unit and the contribution margin ratio for 2010.

(b) Compute the increase in fixed costs for 2011.


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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a b Fixed costs Breakeven sales in units X Unit contrib…View the full answer


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Accounting Principles

Accounting Principles

ISBN: 978-0470533475

9th Edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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Question Details
Chapter # 22- Cost-Volume-Profit
Section: Exercises
Problem: 7
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Question Posted: September 16, 2011 11:40:05
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