Question

Contribution Margin

Sally Company sells 37,000 units at $46 per unit. Variable costs are $26.68 per unit, and fixed costs are $321,700.

Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.

a. Contribution margin ratio (Enter as a whole number.)		%
b. Unit contribution margin (Round to the nearest cent.)	$	per unit
c. Income from operations	$

Break-Even Point

Radison Enterprises sells a product for $107 per unit. The variable cost is $63 per unit, while fixed costs are $474,320.

Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $112 per unit.

a. Break-even point in sales units	units
b. Break-even point if the selling price were increased to $112 per unit	units

Target Profit

Outdoors Company sells a product for $160 per unit. The variable cost is $75 per unit, and fixed costs are $374,000.

Determine (a) the break-even point in sales units and (b) the break-even point in sales units required for the company to achieve a target profit of $67,320.

a. Break-even point in sales units		units
b. Break-even point in sales units required for the company to achieve a target profit of $67,320		units

Sales Mix and Break-Even Analysis

Michael Company has fixed costs of $1,600,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.

Product	Selling Price		Variable Cost per Unit			Contribution Margin per Unit
Model 94	$790		$530			$260
Model 81	540		400			140

The sales mix for products Model 94 and Model 81 is 50% and 50%, respectively. Determine the break-even point in units of Model 94 and Model 81 of the overall (total) product, E. If required, round your answers to the nearest whole number.

a. Product Model 94_____ units

b. Product Model 81______ units

Operating Leverage

Cartersville Company reports the following data:

Sales	$419,400
Variable costs	260,000
Contribution margin	$159,400
Fixed costs	130,400
Income from operations	$29,000

Determine Cartersville Company's operating leverage. Round your answer to one decimal place.______

Margin of Safety

The Ira Company has sales of $230,000, and the break-even point in sales dollars is $177,100.

Determine the company's margin of safety as a percent of current sales.  ____%

Answer 1

Answer 1 - Contribution Margin

Selling Price	$             46.00
Variable costs	$             26.68
Contribution	$             19.32
(a)contribution margin ratio	42%
Selling Price	$             46.00
Variable costs	$             26.68
(b) the unit contribution margin	$             19.32
Sales	$ 1,702,000.00
Less:Variable costs	$    987,160.00
Contribution	$    714,840.00
Less : Fixed Costs	$    321,700.00
(c) income from operations	$    393,140.00

Answer 2 - Break-Even Point

Selling Price	$         107.00
Variable costs	$           63.00
Contribution	$           44.00
Fixed Costs	$ 474,320.00
(a) the break-even point in sales units-Even Point	10780
Selling Price	$         112.00
Variable costs	$           63.00
Contribution	$           49.00
Fixed Costs	$ 474,320.00
(b) the break-even point if the selling price were increased to $112 per unit.	9680

Answer 3 - Target Profit

Selling Price	$         160.00
Variable costs	$           75.00
Contribution	$           85.00
Fixed Costs	$ 374,000.00
(a) the break-even point in sales units-Even Point	4400
Selling Price	$         160.00
Variable costs	$           75.00
Contribution	$           85.00
Fixed Costs	$ 374,000.00
Desired Profit	67320
Total	$ 441,320.00
(b) the break-even point in sales units required for the company to achieve a target profit of $67,320	5192

Answer 4 - sales mix

	Model 94	Model 81
Sales Price per Unit	$         790	$      540
Variable Cost per Unit	$         530	$      400
Contribution Margin per Unit	$         260	$      140
sales Mix	50%	50%
	$         130	$         70
Total	$                             200
Fixed Cost	$                  1,600,000
Break-even Point in Units of Sales Mix	$                          8,000
Product Units at Break-even Point	4000	4000

Answer 5 - Operating Leverage

Sales	$          419,400
Less:Variable costs	$          260,000
Contribution	$          159,400
Less : Fixed Costs	$          130,400
income from operations	$            29,000
Operating Leverage (Contribution / Profit)	5.50

Answer 6 - Margin of Safety

Sales	$          230,000
Break even Sales	$          177,100
Margin of Safety	$            52,900
margin of safety as a percent of current sales	23%