Redford, Inc. has provided the following data: If the dollar contribution margin

Question

Redford, Inc. has provided the following data:

If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will how much?

Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit.

The contribution margin per unit is how much?

Within the relevant range, the variable cost per unit:

Sales Price $200.00 per unit Sales 6,000 Units Fixed Cost $300,000 Variable cost $100.00 per unit Redford, Inc. has provided the following data: If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will how much? Gardner Manufacturing Company produces a product that sells for $120. A selling commission of 10% of the selling price is paid on each unit sold. Variable manufacturing costs are $60 per unit. Fixed manufacturing costs are $20 per unit based on the current level of activity, and fixed selling and administrative costs are $16 per unit. The contribution margin per unit is how much? Within the relevant range, the variable cost per unit:

Explanation / Answer

1) 200*6000 = 1200000

100*6000 = - 600000

= 600000 increase by 10% = 660000

fixed cost -300000 decrease by 20& = -240000

= 300000 =420000

so increses by 420000-300000 = $1,20,000

2)The contribution margin per unit is

120-10%*120-60 =$ 48

3)

A.

remains constant as activity changes

A.

remains constant as activity changes

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