XYZ Inc. produces a machine that washes and dries your laundry in a single, compact unit that
Question:
Research has determined that demand for this product is elastic meaning that a small percentage change in price will result in a larger percentage change in demand. XYZ Inc. is considering lowering its price to increase revenue through increased sales volume. Given the information in the table below, what level of sales would be necessary for XYZ to break even on the proposed price reduction? In other words, how much would sales need to increase to maintain the total contribution that XYZ realized at the higher price?
Current Total Sales
$
Current Contribution Margin
Current Unit Price
$
Proposed Price Reduction
Part
At the reduced price, the contribution margin would be enter your response here
Making Hard Decisions with decision tools
ISBN: 978-0538797573
3rd edition
Authors: Robert Clemen, Terence Reilly