Opal Incorporated sold 30 000 units of its product last year with the following results:
$\begin{array}{ll}
\text { Sales revenue } & \$ 900,000 \
\text { Variable Costs } & \underline{630,000} \
\text { Contribution Margin } & 270,000 \
\text { Fixed Costs } & \underline{190,000} \
\text { Operating Profit } & \$ 80,000 \
\end{array}$ The company expects variable costs to increase by $3 per unit this year.
REQUIRED:
a)Assuming the unit sales price remains constant, compute the unit contribution margin for this year.
b)Given the expected change in variable costs, how many units will have to be sold this year to earn the same operating profit as last year?

Question

Opal Incorporated sold 30 000 units of its product last year with the following results:
 $\begin{array}{ll}
\text { Sales revenue } & \$ 900,000 \
\text { Variable Costs } & \underline{630,000} \
\text { Contribution Margin } & 270,000 \
\text { Fixed Costs } & \underline{190,000} \
\text { Operating Profit } & \$ 80,000 \
\end{array}$ The company expects variable costs to increase by $3 per unit this year.
REQUIRED:
a)Assuming the unit sales price remains constant, compute the unit contribution margin for this year.
b)Given the expected change in variable costs, how many units will have to be sold this year to earn the same operating profit as last year?

Quizplus · Accepted Answer

The Answer of Opal Incorporated sold 30 000 units of its product last year with the following results:
 $\begin{array}{ll}
\text { Sales revenue } & \$ 900,000 \
\text { Variable Costs } & \underline{630,000} \
\text { Contribution Margin } & 270,000 \
\text { Fixed Costs } & \underline{190,000} \
\text { Operating Profit } & \$ 80,000 \
\end{array}$ The company expects variable costs to increase by $3 per unit this year.
REQUIRED:
a)Assuming the unit sales price remains constant, compute the unit contribution margin for this year.
b)Given the expected change in variable costs, how many units will have to be sold this year to earn the same operating profit as last year?

Opal Incorporated Sold 30 000 Units of Its Product Last