Unformatted text preview: New Contribution Margin ($450 - $300) = $150 • Should Vargo Video match a competitor’s 10% discount and reduce selling price to $450 per unit? Management must decide how likely it is that Vargo can achieve the increase in sales as well as the likelihood of lost sales if the discount is not matched • Use of new equipment is being considered that will increase fixed costs by 30% and lower variable costs by 30%. What effect will the new equipment have on the sales required to break-even? Fixed costs will increase $60,000 and variable costs will decrease $90,000 (variable cost per unit = $210)...
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- Fall '11
- Income Statement, $90,000, $60,000, $150