Victoria Company reports the following operating results for the month of April.
VICTORIA COMPANY
CVP Income Statement
For the Month Ended April 30, 2017
Total Per Unit Sales (9,800 units) $519,400 $53 Variable costs 254,506 25.97 Contribution margin 264,894 $27.03 Fixed expenses 205,428 Net income $59,466 Management is considering the following course of action to increase net income: Reduce the selling price by 6%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%. Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.)
(a) Assuming no changes to selling price or costs. Break-even point units Break-even point $ Margin of safety $
(b) Assuming changes to sales price and volume as described above. Break-even point units Break-even point $ Margin of safety $