Question

Grapple Inc. currently has a contribution margin of$19on its only product and sells45,000units. Grapple Inc. is considering cutting its sales price by$2to generate an increase in sales of9,000units. How will this change affect its operating​ income?  

A.It will increase operating income by

$90,000.

B.It will increase operating income by

$63,000.

C.It will decrease operating income by

$90,000.

D.It will decrease operating income by

$63,000.

2.

The following information pertains to the Yellow Dog​ Corporation:

Total Units for information given	5,000
Fixed Cost per Unit	$200
Selling Price per Unit	$300
Variable Costs per Unit	$175
Target Operating Income	$100,000

What is the breakeven in sales​ dollars? (Round any intermediary calculations and your final answer to the nearest whole​ number.)

A.$2,400,000

B.$1,714,286

C.$240,000

D.2640000

Who Done It Mystery Theater sells tickets for dinner and a show for

$55

each. The cost of providing dinner is

$27

per ticket and the fixed cost of operating the theater is

$110,000

per month. The company can accommodate

9,000

patrons each month. What is the contribution margin per​ patron?

A.$0.51

B.$27.00

C.$28.00

D.1.96

Answer 1

1
Revised contribution margin	918000	=(45000+9000)*(19-2)
Less: Current contribution margin	855000	=45000*19
Operating income increase	63000
It will increase operating income by $63,000.
Option B is correct
2
Total fixed costs	1000000	=5000*200
Divide by Contribution margin per unit	125	=300-175
Break even point in units	8000
Breakeven in sales​ dollars	2400000	=8000*300
Option A is correct
3
Contribution margin per​ patron	28.00	=55-27
Option C is correct