The postal service of St

Subject:AccountingPrice: Bought3

Share With

The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets to stamp collectors. The postal service purchases the souvenir sheets from a supplier for $1.30 each. St. Vincent has been selling the souvenir sheets for $18.00 each and ordinarily sells about 90,000 units. To test the market, the postal service recently priced a new souvenir sheet at $15.30 and sales increased to 108,000 units.

 

Required:

1. What total contribution margin did the postal service earn when it sold 90,000 sheets at a price of $18.00 each?

2. By what percentage did the St. Vincent post office decrease its selling price? By what percentage did unit sales increase?

3. What total contribution margin did the postal service earn when it sold 108,000 sheets at a price of $15.30 each?

4. What was the postal service’s increase (decrease) in total contribution margin going from the higher price of $18.00 to the lower price of $15.30?

5. How many sheets would the postal service have to sell at the lower price of $15.30 to equal the total contribution margin earned at the higher price of $18.00? (Round your answer to the nearest whole number.)

6. What percentage increase in the number of sheets sold at $15.30 must be achieved to equal the total contribution margin earned at the higher price of $18.00? (Round your intermediate calculations to the nearest whole number. Round final answer to 1 decimal place.)