Question
In: Accounting
Given the following Selling Price: 50$ per unit Variable Cost: 40$ per unit Fixed Cost: 80,000$...
Given the following
Selling Price: 50$ per unit
Variable Cost: 40$ per unit
Fixed Cost: 80,000$ per unit
Calculate:
A. Contribution margin as well as the contribution margin
ratio
B. Profit(loss) if 7,200 units are sold
C. Margin of safety if 10,100 units are sold
D. Break even point in dollars
Solutions
Expert Solution
Answer to A
| Particulars | Amt |
| Sale Price (A) | 50 |
| Less: Variable Cost | 40 |
| Contribution Margin (B) | 10 |
| Contribution Margin Ratio (B/A) | 20.00% |
Answer to B
| Particulars | Amt |
| Sale Price (A) | 50 |
| Less: Variable Cost | 40 |
| Contribution Margin (B) | 10 |
| No of Units Sold (C ) | 7,200 |
| Total Contribution (B x C) | 72,000 |
| Less: Fixed Cost | 80,000 |
| Profit (Loss) | (8,000) |
Answer to C
Margin of Safety = Total Sales - Break Even Sales
= 10100 - 8000
= 2100 Units
Break Even Sales in Unit = Fixed COst / Contribution Margin
= 80000 / 10
= 8000 Units
Answer to D
Break Even Point in Dollar sales = Fixed Cost / Contribution margin ratio
= 80000 / 0.20
= $400000
ekkarill92 answered 8 months agoRelated Solutions
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