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Calculate the contribution margin ratio

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Reference no: EM132139114

Question - Donuts R Us sells expensive donuts. The company's annual fixed costs re $54000. The sales price of a donut is $10, and it costs the company $6 to make each donut.

Ignore income taxes for the following requirements:

1. Using the contribution margin approach, calculate the company's break-even point in units (donuts).

2. Calculate the contribution margin ratio.

3. Calculate the break-even point in sales dollars. Use the contribution margin ratio in your calculation.

4. How many donuts must the company sell to earn a target net profit of $60000? Use the CVP equation.

Reference no: EM132139114

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