Digital Cellular Sells Phones for $100

question 115

Essay

Digital Cellular sells phones for $100.The unit variable cost per phone is $50 plus a selling commission of 10%.Fixed manufacturing costs total $1,250 per month,while fixed selling and administrative costs total $2,500.
Required:
a.What is the contribution margin per phone?
b.What is the breakeven point in phones?
c.How many phones must be sold to earn pretax income of $7,500?

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Definitions:

Rescission

The act of voiding a contract and returning all involved parties to their original positions as if the contract had never existed.

Equitable Remedies

Legal remedies other than monetary compensation, including injunctions and specific performance, typically granted when money damages are not sufficient.

Plaintiff

The person or entity who initiates a lawsuit by filing a complaint with a court against a defendant.

Sustained Loss

A continuous or prolonged financial loss over a period, indicating an ongoing negative impact on an entity's financial health.