Question

In: Accounting

Erickson, Inc. makes student book bags that sell for $20 each. For the coming year, management...

Erickson, Inc. makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $225,000. Variable costs are $14 per unit.

Instructions

(a)   Compute break-even sales in dollars using the mathematical equation.

(b)   Compute break-even sales using the contribution margin ratio.

(c)   Compute margin of safety ratio assuming actual sales are $937,500.

(d)   Compute the sales required to earn net income of $150,000, using the mathematical equation.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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