# Solve using the Contribution Margin approach. Reflex Manufacturing Corp. manufactures composters at a unit variable cost of

## Question:

Solve using the Contribution Margin approach.

Reflex Manufacturing Corp. manufactures composters at a unit variable cost of $43. It sells them for $70 each. It can produce a maximum of 3200 composters per month. Annual fixed costs total $648,000.

a. What is the break-even volume per month?

b. What is the monthly net income at a volume of 2500 units per month?

c. What is the monthly net income if Reflex operates at 50% of capacity during a recession?

d. At what percent utilization would the annual net income be $226,800?

e. If fixed and variable costs remain the same, how much do the monthly break-even unit sales change for a $1 increase in the selling price?

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