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-A vacuum cleaner retailer has been selling 84 units per month of the...

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Question

Accounting

-A vacuum cleaner retailer has been selling 84 units per month of the basic Bissell
stick model for $80. The retailer's variable costs for that model are $51.
(a) If a retail manager has only the information provided above, calculate the
breakeven sales level for lowering the price of the basic Bissell stick model to
$72. Show your work.
(b) Assume that the retail manager then finds out that when a customer buys a
Bissell stick model, the customer also spends an average of $20 for vacuum cleaner
bags and that the retailer's contribution margin on vacuum cleaner bags is
55%. Given this additional information, recalculate the breakeven sales level for
lowering the price of the basic Bissell stick model to $72. Again, show your work.
(c) Would having the additional information about the vacuum cleaner bags make it
easier for the manager to make more profit from the price decrease or would it make
it harder for her to do so? Explain your reasoning.
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