Michael Vick has written a self improvement book that has the following cost cha
ID: 2375594 • Letter: M
Question
Michael Vick has written a self improvement book that has the following cost characteristics:
Selling Price $16.00 per book
Variable cost per unit:
Production $4.00
Selling & administrative 2.00
Fixed costs:
Production $88,000 per year
Selling & administrative 18,000 per year
Assume the variable production cost and the price were both cut by $2.00 per unit. Which of the following would change?
Breakeven point in units
Contribution margin ratio
Total fixed costs
Contribution margin per unit
Explanation / Answer
b) Contribution margin