In: Accounting
Solution
Unit Selling Price | $11 | |
Unit Variable Cost | $8 | |
Contribution | $3 | |
Fixed Costs | $4,820 | |
7 | ||
Contribution Margin per Pipe is $3 | ||
8 | ||
Break Even Point in dollars | ||
Fixed Costs / Contibution | ||
$4820 / $3 | ||
1607 units | ||
Break Even Point in dollars | ||
1607 * $11 | ||
$17,677 | ||
9 | ||
Pipes to sold to earn $5000 | ||
Profit to be made | $5,000 | |
Add - Fixed Cost | $4,820 | |
Contribution in value (a) | $9,820 | |
Contibution Per unit (Given) (b) | $3 | |
Units to be sold for $5000 Profit (a/b) | 3273 | |
10 | ||
Margin of Safety assuming 1800 pipes are sold | ||
Margin of Safety = Sales - Break even Sales | ||
Break Even Units = 1607 (calculated in 8 point) | ||
Margin of Saftey = 1800 - 1607 | ||
Margin of Saftey = 193 units | ||
Margin of Saftey in value = 193 units*11 = $2123 | ||
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