Question

If the company wishes to increase its total dollar contribution margin by 30% in 2020, by how much will it need to increase its sales if selling price per unit, variable price per unit and total fixed costs remain constant?

Answer 1

Answer:

$35,400

Explanation:

The computation of the increase in sales is shown below:

The Total sales value is

= Number of units sold × selling price per unit

= 2,950 units × $40 per unit

= $118,000

Now if the contribution margin increases by 30, so ultimately the sales is also increased by 30%

Therefore, the increase in sales is

= $118,000 × 30%

= $35,400

Answer 2

The amount that needs to be $35,400

• The computation is shown below:

The Total sales value is

= Number of units sold × selling price per unit

= 2,950 units × $40 per unit

= $118,000

Now in the case when the contribution margin increases by 30, so ultimately the sales is also increased by 30%

So, the increase in sales is

= $118,000 × 30%

= $35,400

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