The overall contribution margin could be $40,000 when you consider that it's miles same to the constant charges on the break-even point
The required details for contribution margin in given paragraph
b) The $18 lower in variable charges will reason the contribution margin according to unit to growth from $a hundred and seventy to $188.
Expected overall contribution margin:
250 gadgets x $188 according to unit.
$47,000
Present overall contribution margin:
three hundred gadgets x $a hundred and seventy according to unit.
51,000
Decrease in overall contribution margin.
$(4,000)
The much less steeply-priced additives need to now no longer be used within side the manufacture of Product SD. Net running earnings will lower by $4,000.
c) The lower in promoting rate according to unit will reason the unit contribution margin to lower from $a hundred and seventy to $148.
Expected overall contribution margin:
three hundred gadgets x 150% x $148 according to unit.
$66,600
Present overall contribution margin:
three hundred gadgets x $a hundred and seventy according to unit
51,000
Incremental contribution margin.
15,600
Change in constant charges:
Less incremental marketing and marketing expense.
20,000
Reduction in internet running earnings.
**The modifications need to now no longer be made.
d. The use of the automatic procedure could have an effect on each constant and variable charges. Fixed charges will growth by $10,000 from $40,000 to $50,000. Variable charges will lower by $20 from $109 to $89, and the unit contribution margin will growth from $a hundred and seventy to $a hundred ninety.
Expected overall contribution margin:
three hundred gadgets x 112% x $a hundred ninety according to unit
$63,840
Present overall contribution margin:
three hundred gadgets x $a hundred and seventy according to unit
51,000
Increase in overall contribution margin.
12,840
Change in constant charges:
Less month-to-month gadget rental.
10,000
Increase in internet running earnings.
$ 2,840
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