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who can we calculate contribution ( as ( Contribution (parts sales) ($120 + inflation per unit
I didn’t understand please help who to drive to the figure in the answer .
Since they are currently sold for 200 and give a contribution of 40, the cost must be 200 – 40 = 160.
They are going to increase the price to 280 and so the new contribution will be 280 – 160 = 120 per unit.So, using the US inflation rate of 3%, the contribution at time 1 = 150 x 120 x 1.03 = 18540
At time 2 = 480 x 120 x 1.03^2 = 61108, and so on.
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