A Product with a 40% Contribution Margin Broke Even at a Sales

question 7

Essay

A product with a 40% contribution margin broke even at a sales level of $120,000. New safety regulations will raise fixed costs by $20,000. If no other cost changes occur, what will be the new breakeven point?

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Definitions:

Adjustment

A modification made to accounts or financial statements to correct them or to reflect changes in economic circumstances.

Unearned Subscription Revenue

Revenue received in advance for services or goods to be provided in the future, recognized as a liability until delivered.

Subscription Revenue

Income generated from customers who pay a recurring price at regular intervals for access to a product or service.

Quarterly

Pertaining to a period of three months or a quarter of a year, often used in finance to denote regular intervals for reporting or payment.