Question

To combat the current difficult situation, the manager plans to curb the variable expenses and bring them to ₹500 per piece. Compute the new break-even point and contribution margin. Analyze and explain the movement in contribution margin to the manager

Answer 1

Break-even point:

$=\frac{3,000,000}{(2,500-1,000)}=2,000$ units.

Contribution margin:

$=\frac{(2,500-1,000)}{2,500}=0.6$