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If the sales price per unit were to increase by 10%, variable expenses were to increase by 12.5%, and fixed expenses were to increase by 20%, what would be the new contribution margin per unit

Respuesta :

Incomplete question. Missing part read;

Hart Company sold 5,000 units for a price of $50 per unit and had the following information:

  • Variable expenses: $160,000
  • Fixed expenses: $125,000
  • Breakeven sales point: $347,222

Answer:

$19

Explanation:

Using the contribution margin per unit represented as dollar value formula:

Unit Contribution Margin (CM)= Revenues per Unit -  minus the  Variable Expenses per Unit

where,

  • sales price per unit increase of 10%= $50+10% ([tex]\frac{10}{100}[/tex]*50+$50) =$55.
  • variable expenses increase by 12.5%= $160,000/5000= $32; $32+12.5% ([tex]\frac{12.5}{100}[/tex]*32+$32)= $36.

CM = $55-$36= $19.

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