Calculate Total Contribution

Question

Ord Manufacturing produces a single product that sells for $16. Variable (flexible) costs per unit equal $11.20. The company expects the total fixed (capacity-related) costs to be $7,200 for the next month at the projected sales level of 20,000 units. In an attempt to improve performance, management is considering a number of alternatives. Suppose that Ord Manufacturing’s management believes that a 10% reduction in the selling price will results in a 30% increase in sales. If this proposal is implemented, what will be the change in profit per month?

Summary

The question belongs to Finance and it discusses about calculation of contribution.

Total Word Count 28