Question

Company manufactures and sells a single product. The​ company's sales and expenses for last year​ follow:

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​(Click the icon to view the​ information.)Read the requirements

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.

Requirement 1. Fill in the missing numbers in the table. Use the following questions to help fill in the missing numbers in the​ table:

a. What is the total contribution​ margin?

The total contribution margin is

.

b. What is the total variable​ expense?

The total variable expense is

.

c. How many units were​ sold?

units were sold.

d. What is the​ per-unit variable​ expense?

The per-unit variable expense is

.

e. What is the​ per-unit contribution​ margin?

The per-unit contribution margin is

.

Now fill in the missing numbers in the table. ​(Enter the percentages as whole​ numbers, "XX")

	Total	Per Unit	%
Sales. . . . . . . . . . . . . . . . . .	$115,000	$50		%
Variable expenses. . . . . . . .				%
Contribution margin. . . . . .				%
Fixed expenses. . . . . . . . . .	11,500
Operating income. . . . . . . .	$46,000

Requirement 2. Answer the following questions about breakeven​ analysis:

a. What is the breakeven point in​ units?

Begin by identifying the formula to compute the breakeven point in units.

(

+

) ÷

=

Breakeven sales in units

The breakeven point in units is

.

b. What is the breakeven point in sales​ dollars?

Begin by identifying the formula to compute the breakeven point in sales dollars.

(

+

) ÷

=

Breakeven sales in dollars

The breakeven point in sales dollars is

.

Requirement 3. Answer the following questions about target profit analysis and safety​ margin:

a. How many units must the company sell in order to earn a profit of

$58,000​?

The company must sell

units in order to earn a profit of $58,000.

b. What is the current margin of safety in​ units?

Begin by identifying the formula to compute the current margin of safety in units.

–

=

Margin of safety in units

The current margin of safety in units is

.

c. What is the margin of safety in sales​ dollars?

Begin by identifying the formula to compute the margin of safety in dollars.

–

=

Margin of safety in dollars

The margin of safety in dollars is

.

d. What is the margin of safety in​ percentage?

Begin by identifying the formula to compute the margin of safety in percentage.

					Margin of safety as a
		÷		=	percentage of budgeted sales

​(Round the percentage to the nearest tenth​ percent, X.X%.)

The margin of safety percentage is

%.

Sales. . . . . . . . . . . . . . . . . . .

$115,000

$50

?

Variable expenses. . . . . . .

?

?

?

Contribution margin. . . . . .

?

?

?

Fixed expenses. . . . . . . . . .

11,500

Operating income. . . . . . . .

$46,000

Answer 1

a.Total contribution Margin = Fixed expenses + Operating Income

= 11500+46,000

= $57,500

b.Total variable expense = Total Sales – Total contribution margin

= 115,000-57,500

= $57,500

c.Units sold = Total Sales/Selling price per unit

= 115,000/50

= 2,300 units

d. Per unit variable expense = 57,500/2,300

= $25 per unit

e. Per unit CM = 57,500/2,300

= $25 per unit

	total	per unit	%
Sales	115,000	50	100%
Variable expenses	57,500	25	50%
Contribution margin	57,500	25	50%
Fixed expenses	11,500
Operating income	46,000

a. Break even point in units = (Fixed expenses + operating income)/Contribution margin per unit

= (11500+0)/25

= 460 units

b. Sales dollars = (Fixed expenses + Operating Income)/Contribution Margin ratio

= (11,500+ 0)/50%

= $23,000

3.a. Units = (11500+58000)/25

= 2,780 units

b. Margin of safety = Budgeted sales in units – break even sales in units

= 2300 – 460

= 1,840 units

c. Sales dollars = Budgeted Sales dollars – breakeven sales in dollars

= 115,000 – 23000

= $92,000

% = Margin of safety in dollars/Budgeted sales in dollars

= 92000/115,000

= 80%