Claires Antiques Essay Example | Topics and Well Written Essays - 500 words

Claires Antiques - Essay Example Since the company does not want to pass the increased commission to its customers, they will have to make up for the $15, 190 decrease in profit for the clocks product line and $23, 310 and $25, 025 for dinette sets and bedroom suites respectively. The company can make up for this lost by asking distributors to sell a lower percentage of the total expected sales volume in order to lessen the commission expenses. 5. In calculating the new monthly break even volume for Claire's Antiques, we must take into account the changes in price and monthly fixed cost. Cutting the unit sales price by 10% will yield $3, 300 ($3, 700 x .90) for one dinette set. Fixed cost will be increased to $27, 250 to take into account the $1, 000 advertising cost. The new contribution margin is computed as $3, 300 minus variable material cost of $1, 280 which is equal to $2, 050. Break even in units can be generated by dividing the $27, 250 fixed cost by the new contribution margin of 42, 050. This will give 13 units for Claire's Antiques to break even each month.