1. If the contribution margin is greater than zero A. the selling price of each
ID: 2467483 • Letter: 1
Question
1. If the contribution margin is greater than zero
A. the selling price of each product is less than the variable cost per unit. B. total variable costs are less than sales revenue. C.the fixed costs are greater than variable cost.
2. Charlie Shine has written a self-improvement book. The following are its pricing and cost details:
Charlie Shine is currently selling 5,200 books per year. What impact would a 22% increase in sales have on profit?
a. Increase by 22% B. Increase by 100% C. Increase by $20,592 D. Increase by $14,414
Selling price $18.00 per book Variable costs per unit: Production $3.50 Selling and administrative $1.90 Fixed costs: Production $33,600 per year Selling and administrative 15,540 per yearExplanation / Answer
Q1 B. total variable costs are less than sales revenue Since Contribution = Sales - Variable costs Since contributin margin is positive it means sales is more than variable costs 2) D. Increase by $14,414 Particulars Existing Proposed Existing +22% Incremental Sales in units 5,200.00 6,344.00 1,144.00 Sales in $ @18 93,600.00 114,192.00 20,592.00 Variable Costs: Production @3.5 18,200.00 22,204.00 4,004.00 Selling and admin@1.90 9,880.00 12,053.60 2,173.60 Total Variable Costs 28,080.00 34,257.60 6,177.60 Contribution = Sales- VC 65,520.00 79,934.40 14,414.40 Fixed Costs: Production 33,600.00 33,600.00 - Selling and Administrative 15,540.00 15,540.00 - Fixed Costs 49,140.00 49,140.00 - Income= Contribution - FC 16,380.00 30,794.40 14,414.40
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