Shakeli sold 410,000 iced coffees for $5 per unit. Variable cost per unit is $1,...
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Accounting
Shakeli sold 410,000 iced coffees for $5 per unit. Variable cost per unit is $1, and total fixed costs are $640,000.
1. Calculate the contribution margin and the operating income.
2. The company has an opportunity to purchase innovative technology which will increase the fixed costs to 750,000 and reduce variable cost per unit to $0.80. Assume sales volume and selling price do not change, calculate the contribution margin and the operating income.
3. Should the company invest in the new technology? Explain.
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