Answer:
1) fixed cot increase to $1,875 from $1.5
2) the marginal contribution per paper do not change as the change in volume do not make a change in the variable cost nor sales price.
3)
minimum to break-even at 1,000,000 units = $1.95
at 800,000 units: $2.4375
Explanation:
rent expense 500,000
labor 1,000,000
total fixed 1,500,000
variable cost:
0.35 printing and 0.10 delivery = 0.45
Fixed cost:
1,500,000 / 1,000,000 = 1.5
new fixed cost:
1,500,000 / 800,000 = 1,875
<u><em>to break even: </em></u>
1,500,000 / (selling price - 0.45 variale cost) = 1,000,000
selling price: (1,500,000 + 0.45 x 1,000,000) / 1,000,000
selling price: 1.95
1,500,000 / (selling price - 0.45 variale cost) = 800,000
selling price: (1,500,000 + 0.45 x 800,000) / 800,000
selling price: 2,4375