The Cumberland Company provides the following information: Break-Even in Units and Sales Dollars, Margin of Safety D...
The Cumberland Company provides the following
information:
|
Break-Even in Units and Sales Dollars, Margin of Safety Drake Company produces a single product. Last year's income statement is as follows:
Required: 1. Compute the break-even point in units and sales revenue. In your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal places. Round your final answers to the nearest whole unit or dollar. |
|||||||||||
What is the variable cost per unit for Cumberland?
| Break-even units | units | |
| Break-even dollars | $ |
2. What was the margin of safety in dollars for
Drake Company last year? Round your final answer to the nearest
whole dollar.
$
Homework Answers
Break even units = Fixed cost/Contribution margin per unit
Contribution margin per unit = 360,000/18,000 = 20
= 273,000/20
= 13,650
Breakeven dollars = Fixed cost/Cm ratio
CM ratio = 360,000/1,083,600 = 33.2226%
= 273,000/33.2226%
= 821,730
Margin of Safety = Sales - Breakeven sales
= 1,083,600 - 821,730
= 261,870
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