18-9 18-15 - EXERCISE 18-15 1. Unit sales price =...

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EXERCISE 18-9 (1) Contribution margin per room Contribution margin per room Contribution margin ratio = = = $60 – ($8 + $28) $24 $24 ÷ $60 = 40% Fixed costs = $7,200 + $1,500 + $1,200 + $300 = $10,200 Break-even point in rooms = $10,200 ÷ $24 = 425 (2) Break-even point in dollars = 425 rooms X $60 per room = $25,500 per month OR Fixed costs ÷ Contribution margin ratio = $10,200 ÷ .40 = $25,500 per month
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Unformatted text preview: EXERCISE 18-15 1. Unit sales price = $350,000 ÷ 5,000 units = $70 Increase selling price to $77, or ($70 X 110%). Net income = $385,000 – $210,000 – $90,000 = $85,000. 2. Reduce variable costs to 55% of sales. Net income = $350,000 – $192,500 – $90,000 = $67,500. Alternative 1, increasing selling price, will produce the highest net income....
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This note was uploaded on 07/24/2011 for the course FIN 304 taught by Professor Douard,j during the Spring '11 term at Abu Dhabi University.

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