Reference no: EM132984024

Question - Haven Ltd produces a single product. The projected income statement for the coming year is as follows:

Sales (30,000 units @ $25) $750,000

Total Variable Costs $(390,000)

Contribution Margin $360,000

Total Fixed Costs $(189,900)

Profit $170,100

Required -

a. Compute the break-even point in units and sales dollars. (Note: round to the nearest dollar).

b. Compute the new operating income if sales are 15 per cent higher than expected.

c. If the variable cost became $15 per unit, what would the new break-even amount be in units? (Note: round to the nearest unit and dollar)

d. Explain what is meant by a margin of safety and what would this margin be if Haven Ltd sold 28,000 units per year? (Note: use your answer from Part c.)

e. Explain the meaning of a 'mixed cost' and give an example.