The price of a product is $10/unit with a variable cost of $8/unit. The fixed co

Question

The price of a product is $10/unit with a variable cost of $8/unit. The fixed costs are S72.The contribution margin is S /unit. The breakeven point is units and the profit for 40 units is $ . The margin of safety for 40 units is %. The price of a product is $40/unit with a contribution margin of $10/unit and fixed costs of $200. The variable costs are $ /unit. The break-even point is units. To make a profit of $50 will require sales of units. The margin of safety for 25 units is % When sales are $200, variable costs are $140 and fixed costs are $39. The profit is $ . The contribution margin is % and the break-even point is $ . The margin of safety for sales of $200 is %. If a marketing campaign will increase sales by $40, what is the maximum amount that you would pay for that marketing campaign? $

Explanation / Answer

(2) variable cost = price of product -contribution margin = 40 -10 = $30/unit Break even units = Fixed cost/contribution margin = 200/10 = 20 units Profit = Units sold*contribution margin - fixed cost. Required sales = (50 + 200)/10 = 25 units Margins safety = (Total sold units - break even units)/Total sold units * 100 = 20 % (3) profit = sales - fixed cost - variable cost = 200 - 140-39 = $21 Contribution margin = sales - fixed cost / sales * 100 = (200-140)/200*100 = 30% Break even point = fixed cost/%contribution margin/100 = 39/0.3 = $130 Profit in increase os sales by $ 40 = 0.3*40 = $12 The maximum amount for marketing = $12

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