Kylie’s Cookies is considering the purchase of a larger oven that will cost $2,200 and will increase her fixed costs by $59. What would happen if she purchased the new oven to realize the variable cost savings of $0.10 per cookie, and what would happen if she raised her price by just $0.20? She feels confident that such a small price increase will decrease the sales by only 25 units and may help her offset the increase in fixed costs. Given the following current prices how would the break-even in units and dollars change if she doesn’t increase the selling price and if she does increase the selling price? Complete the monthly contribution margin income statement for each of these cases.

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Selling price, variable cost, and fixed cost change analysis With Current With decreased VC Price and increased FC Sales price per unit Variable cost per unit Contribution margin per unit Fixed costs Break-even in units Break-even in dollars $1.75 0.40 $1.35 $ 405 Unit sales, expected Sales Variable costs Contribution margin Fixed costs Net income 300 $ 525 Monthly contribution margin income statement With increased SP, decreased VC, and increased FC 800