Compute the variable cost per unit and the contribution margin ratio for 2012.

In 2012, Paterno Company had a break-even point of $350,000 based on a selling price of $7 per unit and fixed costs of $105,000. In 2013, the selling price and the variable cost per unit did not change, but the break-even point increased to $420,000.

Instructions

(a) Compute the variable cost per unit and the contribution margin ratio for 2012.

(b) Compute the increase in fixed costs for 2013.