Solution-Calculate the break-even point in units and sales

Calculate the break-even point in units and sales dollars

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Reference no: EM133176618

Question - Sheridan Manufacturing Ltd. has provided you with the following CVP income statement:

Sales (5,500 units)	$1,100,000	$200	per unit
Variable costs	726,000	132	per unit
Contribution margin	374,000	$68	per unit
Fixed costs	314,160
Operating income	$59,840

Management is considering the following course of action to increase operating income: reduce the selling price by 20%, with no changes to unit variable costs or fixed costs. Management feels that this change will increase unit sales by 30%.

Required -

1. Calculate the break-even point in units and sales dollars with no change in sales.

2. Calculate the break-even point in units and sales dollars with the proposed change in sales price.

3. Should management go forward with the reduction in sales price?

Reference no: EM133176618

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Calculate the break-even point in units and sales dollars

Reference no: EM133176618

Reference no: EM133176618

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