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The information that follows was obtained from the accounting records of Gladstone Manufacturing during a period when the company sold 100,000 units.

Sales: $8,800,000

Variable Costs: 2,400,000

Fixed Costs: 6,016,000

Required:
A. Compute the company's per-unit contribution margin and break-even point.
B. How many units must Gladstone sell to produce a target net profit of $550,400?
C. Assume that Gladstone was able to reduce the variable cost per unit by $4. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $640,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 10%, what effect, if any, would this cost increase have on the company's contribution margin?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9965331

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