Compute the additional profit that bandaleria would earn

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Reference no: EM13940063

BREAK-EVEN UNITS, CONTRIBUTION MARGIN RATIO, MARGIN OF SAFETY

Bandaleria Company's projected profit for the coming year is as follows:

	Total	Per Unit
Sales	$2,480,000	$20
Less: Variable expenses	1,488,000	12
Contribution margin	$ 992,000	$ 8
Less: Fixed expenses	716,800
Operating income	$ 275,200

Required:

1. Compute the break-even point in units.

2. How many units must be sold to earn a profit of $640,000?

3. Compute the contribution margin ratio. Using that ratio, compute the additional profit that Bandaleria would earn if sales were $50,000 more than expected.

4. For the projected level of sales, compute the margin of safety in units.

Reference no: EM13940063

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