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Compute the breakeven point in units and dollar value

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Reference no: EM133166127

Question - A company produces a single product called the Fidget. The following information relating to the next year has been provided:

$

Sales 1,200,000

Less Variable expenses 840,000

Contribution margin 360,000

Less Fixed expenses 300,000

Net operating income 60,000

The company plans to sell 15,000 next year.

Required -

a. Calculate the contribution margin per unit and the contribution margin ratio.

b. Compute the breakeven point in units and dollar value.

c. Compute the number of units to be sold in order to earn a profit of $36,000.

d. Calculate the sales value required to earn a profit of $36,000 if the tax rate is 25%.

e. Calculate the margin of safety ratio.

f. Using an excel sheet, prepare the breakeven chart assuming that the company sells 15,000 units.

g. State two (2) assumptions of CVP analysis.

Reference no: EM133166127

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