Answer:
1) $60 2) 25% 3) 5,400 units 4) $1,296,000
Explanation:
Part 1: Compute the Contribution Margin Per Unit based on the new selling price of $240
= New Selling Price - Variable Cost per unit = $240- $180 = $60 per unit
Part 2) Compute Hudson Co's contribution Margin Ration
= The Contribution per unit (determined in step 1 )/ Selling Price x 100
= 60/240 x 100= 25%
part 3) Compute Hudson Co.'s break-even point in units.
the formula = Fixed cost/ contribution margin per unit pre-determined
= $324,000/ $60 = 5,400 units
Part 4) Compute Hudson Co.'s break-even point in sales dollars.
The formula = Fixed cost/ the predetermined Contribution margin
= $324,000/25%= $324,000/0.25 = $1,296,000
