Company A is presenting following figures concerning their business: Planned production volume: 2 000 units Variable...

Company A is presenting following figures concerning their business:

Planned production volume: 2 000 units

Variable costs/unit:

material 900 €

labor 1 200 €

other necessities 400 €

Fixed costs: 1 500 000 €

Sales price per unit: 4 000 €

Calculate:

result of the business according to budget

break even point

margin of safety

margin of safety (percentage)

contribution margin

contribution margin (percentage)

Expert Solution

Unit contribution margin = 4000-900-1200-400= 1500
1
Break even point = Fixed costs/Unit contribution margin = 1500000/1500 = 1000
2
Margin of safety = 2000-1000 = 1000
3
Margin of safety (percentage) = 1000/2000 = 50%
4
Unit contribution margin = 1500
Total contribution margin = 2000*1500 = 3000000
5
Contribution margin (percentage) = 1500/4000= 37.50%

ekkarill92 answered 2 years ago

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