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The lighting division of Universal Electric Company plans to introduce a new street light based on the following accounting information: Fixed costs per period are $3136; variable cost per unit is $157; selling price per unit is $185; and capacity per period is 320 units. (a) Compute (i) The contribution margin; (ii) The contribution rate. (b) Compute the break-even point (i) In units; (ii) As a percent of capacity; (iii) In sales dollars. (c) Draw a detailed break-even chart. (d) For each of the following independent situations, determine the break-even point as a percent of capacity: (i) Fixed costs are reduced to$2688; (ii) Fixed costs increase to $4588 and variable costs are reduced to 80% of the selling price; (iii) The selling price is reduced to $171.
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