Reference no: EM133034880

Question - The Oceanside Garden Nursery buys flowering plants in four-inch pots for $1.00 each and sells them for $2.50 each. Management budgets monthly fixed costs of $2,100 for sales volumes between 0 and 5,000 plants. Data has been summarized below;

DATA
Description	Amount
Sales price per unit	$2.50
Variable cost per unit	$1.00
Total fixed costs	$2,100
Profit at breakeven	0
Target profit	$5,000

Required -

a) Compute the contribution margin per unit.

b) Use the contribution margin approach to compute the company's monthly breakeven point in units.

c) Use the contribution margin ratio approach to compute the breakeven point in sales dollars.

d) Use the contribution margin approach to compute the monthly sales level (in units) required to earn a target operating income of $5,000.

e) Compute the company's margin of safety.