Calculate the contribution margin per unit

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Reference no: EM133443840

Question: The Leonardo Company had the following functional income statement for the month of July 2014: Sales ($20 x 20,000 units) $400,000 Costs of goods sold: Direct materials $ 60,000 Direct labor 40,000 Variable factory overhead 120,000 Fixed factory overhead 50,000 270,000 Gross profit $130,000 Selling and administrative expenses: Variable $ 20,000 Fixed 50,000 70,000 Operating income $ 60,000 There were no beginning and ending inventories. Leonardo has a tax rate of 25%

Required:

a. Calculate the contribution margin per unit.

b. Calculate the contribution margin ratio.

c. What is the break-even point in units?

d. What is the amount of sales in dollars needed to obtain an after-tax profit of $30,000?

e. Compute the margin of safety in dollars based on July 2014's financial performance.

Reference no: EM133443840

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