Paulsen Company sells only one product. The regular selling price is $50. Variable costs are...
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Accounting
Paulsen Company sells only one product. The regular selling price is $50. Variable costs are 70% of this selling price, and fixed costs are $7,500 per month.
Management decides to increase the selling price from $50 to $55 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
1. Refer to the above data. At the original selling price of $50 per unit, what is the contribution margin ratio?
2. Refer to the above data. At the original selling price of $50 per unit, how many units must Paulsen sell to break even?
3. Refer to the above data. At the original selling price of $50 per unit, what dollar volume of sales per month is required for Paulsen to earn a monthly operating income of $5,000?
4. Refer to the above data. At the increased selling price of $55 per unit, what is the contribution margin ratio?
5. Refer to the above data. At the increased selling price of $55 per unit, what dollar volume of sales per month is required to break-even?
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