Calculate in sales units the margin of safety for ipm

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Reference no: EM132669570

International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows:

                                                 Alpha                    Beta            Gamma                   Total
Selling price per unit            $250                    $400           $1 500
Variable cost per unit            $80                       $200             $800
Expected unit sales (annual) 12,000                    6,000           2,000          20,000
Sales mix                         50 percent              40 percent     10 percent    100 percent

Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales.

Required:

Problem a) Calculate the weighted average unit contribution margin, assuming a constant sales mix.

Problem b) How many units of each printer must be sold to break even?

Problem c) i) Explain what is margin of safety

ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are 25,000units?

Reference no: EM132669570

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