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    Betterbuy Electronics Store, contribution margin, sales revenue

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    I really need help with this problem:

    Preston Parkas company's sales revenue is $30 per unit , variable costs are $19.50 per unit, and fixed costs are $147,000.

    a. What is Preston's contribution margin per unit?
    b. Determine the number of units Preston must sell to break even
    c. Detemine the sale revenue required to earn (pretax) income equal 10 20% of revenue.
    d. Preston is considering increasing its advertising expense by $28,500. How much of an increase in sales unts is necessary from expanded advertising to justify this expenditure?

    See attached file.

    2-28
    (a) Price - Variable = Cost Contribution margin per unit

    (b) Let X = the number of units sold to break even
    Sales revenue - Costs = Income
    (Price * Quantity) - Variable costs - Fixed costs = Income

    (c) Let X = the number of units sold to generate revenue necessary to earn pretax income of 20% of revenue
    Sales revenue - Costs = Income
    (Price * Quantity) - Variable costs - Fixed costs = Income

    Price * required units = Desired revenue

    (d) Let Y = necessary increase in sales units
    Incremental sales revenue - Incremental variable costs - Incremental fixed costs = $0

    © BrainMass Inc. brainmass.com October 9, 2019, 9:48 pm ad1c9bdddf
    https://brainmass.com/business/sales-revenue/betterbuy-electronics-store-contribution-margin-sales-revenue-197851

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    Solution Preview

    a. What is Preston's contribution margin per unit?

    Price - Variable Cost = Contribution margin per unit
    Price = $30 and variable cost = $19.50
    Contribution Margin per unit = 30-19.50 = $10.50

    b. Determine the number of units Preston must sell to break even

    Let X = the number of units sold to break even
    Sales revenue - Costs = Income
    At breakeven, total revenue = total cost and ...

    Solution Summary

    The solution explains the calculations relating to breakeven analysis

    $2.19