Webber, Inc. developed the following information for its product: ......................................Per Unit Sales price..............................$90 Variable cost.............................63 Contribution margin

Question:

Webber, Inc. developed the following information for its product:

......................................Per Unit

Sales price..............................$90

Variable cost.............................63

Contribution margin...................$27

Total fixed costs .............$1,080,000

Answer the following independent questions.

How many units must be sold to break even?

What is the total sales that must be generated for the company to earn a profit of $60,000?

If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making?

Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $210,000. (Round down your answer to whole unit, e.g. 15,000.)

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...