Diana Company, a sole proprietorship, sells only one product. The regular price is $160. Variable costs are 55% of this selling price,and fixed costs are $8,400 a month. Management decides to decrease the selling price from $160 to $145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
(a) At the original selling price of $160 a unit, what is the contribution margin ratio? _______________%
(b) At the original selling price of $160 a unit,what dollar volume of sales per month is required for DianaCompany to break-even? (Round your answer to the nearest whole dollar) $_______________
(c) At the original selling price of $160 a unit, what dollar volume of sales per month is required for DianaCompany to earn a monthly operating income of $6,500? (Round your answer to the nearest whole dollar)$________________
(d) At the reduced selling price of $145 a unit, what is the contribution margin ratio? _______________%
(e) At the reduced selling price of $145 a unit, what dollar volume of sales per month is required to break-even? (Round your intermediate percentage to one decimal place and final answer to the nearest wholedollar)$_______________
(f) Show and explain the break-even point by extracting relevant information from the case in MS Excel