Question

EasyFind manufactures and sells golf balls. The company is conducting a price test to find a better price point. Presently their golf balls sell for $22 per dozen. Their current volume is 5,930 dozen per month. They are considering reducing their sales price by 29% per dozen. If variable costs are $10 per dozen, what is the new volume required to earn the same total contribution as before the price decrease

Answer 1

Answer:

10,094= units

Explanation:

First, we need to calculate the current contribution margin:

Current contribution margin= 5,930*(22 - 10)= $71,160

Now, we will determine the new sales price and number of units to sell:

Selling price= 22/1.29= $17.05

71,160= units*(17.05 - 10)

71,160/7.05= units

10,094= units