Pronghorn produces one single product, a small reading tablet,
and sells it at $100 per unit. Its current annual sales are
$200,000. Its annual fixed costs include factory rent, $38,000;
depreciation expense; equipment, $10,000; utilities, $18,000;
insurance, $8,000. Its variable costs include materials, $30 per
unit, and direct labour, $40 per unit. Pronghorn’s income tax rate
is 20%.
1.What is the contribution margin per unit?
2.What is the contribution margin ratio?
3.How many units must Pronghorn sell to break even?...