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Iris Manufacturing Inc. has provided you with the following CVP income statement: Sales (5,500 units) $1,100,000...

Iris Manufacturing Inc. has provided you with the following CVP income statement:

Sales (5,500 units) $1,100,000 $200 per unit
Variable costs 693,000 126 per unit
Contribution margin 407,000 $74 per unit
Fixed costs 339,660
Operating income $67,340


Management is considering the following course of action to increase operating income: reduce the selling price by 10%, with no changes to unit variable costs or fixed costs. Management feels that this change will increase unit sales by 30%.

Calculate the break-even point in units and sales dollars with no change in sales.  

Calculate the break-even point in units and sales dollars with the proposed change in sales price

Should management go forward with the reduction in sales price?

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14 Calculate the break-even point in units and sales dollars with no change in sales. Selling Price Less Variable Expenses Co37 Breakeven Point in Sales dollars - Fixed expenses Contribution Margin Ratio 38 339,660 37% Breakeven Point in Sales dollarBreakeven Point in Units = Fixed Expenses Contribution Margin Per Unit 339660 54.00 Breakeven Point in Units = 6290 Units Bre

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