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[SOLVED] Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cat. Labor costs will go from $2.88 to $3.48 per unit.

Chester has negotiated a new labor contract for the next round that will affect the cost for their product Cat. Labor costs will go from $2.88 to $3.48 per unit. Assume all period and other variable costs remain the same. If Chester were to absorb the new labor costs without passing them on in the form of higher prices, how many units of product Cat would need to be sold next round to break even on the product?

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honeyd


24-04-21 | 13:24:51

Contribution margin=16-6.8-3.48
=5.72
Units to be sold=period cost/contribution margin
=8061/5.72
=1409

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