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