# Soul Street Company, a sole proprietorship, sells only one product. The regular price is \$160….

Soul Street Company, a sole proprietorship, sells only one product. The regular price is \$160. Variable costs are 55% of this selling price, and fixed costs are \$8,400 a month.Management decides to decrease the selling price from \$160 to \$145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.(a) At the original selling price of \$160 a unit, what is the contribution margin ratio?- – – – – – – %(b) At the original selling price of \$160 a unit, what dollar volume of sales per month is required for Diana Company to break-even? \$

Soul Street Company, a sole proprietorship, sells only one product. The regular price is \$160. Variable costs are 55% of this selling price, and fixed costs are \$8,400 a month.Management decides to decrease the selling price from \$160 to \$145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.(a) At the original selling price of \$160 a unit, what is the contribution margin ratio?- – – – – – – %(b) At the original selling price of \$160 a unit, what dollar volume of sales per month is required for Diana Company to break-even? \$_ _ _ _ _ _ _(c) At the original selling price of \$160 a unit, what dollar volume of sales per month is required for Diana Company to earn a monthly operating income of \$6,500?\$_ _ _ _ _ _ _(d) At the reduced selling price of \$145 a unit, what is the contribution margin ratio?- – – – – – – %(e) At the reduced selling price of \$145 a unit, what dollar volume of sales per month is required to break-even? \$_ _ _ _ _ _ _B) Explain the significance of Contribution Analysis in Cost Accounting with special reference to the example above.

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