At a volume of 3,000 units, Rudy Inc. reported the following: Sales $2,400,000 V

Question

At a volume of 3,000 units, Rudy Inc. reported the following:

Sales $2,400,000          

Variable Costs   $900,000   

Fixed Costs $650,000

Contribution margin per unit is 500

1. Compute break even units

2. Compute CM ratio. Round to three places and state in decimal form.

3. Compute break-even dollars

4. Compute break-even units for a target profit of $1,000,000

5.Compute break-even sales dollars for a target profit of $1,500,000

6. Compute the safety margin in dollars at 3,000 units:

7. Compute the margin of safety above as a percentage of sales - round to two places and state in decimal form i.e. 42% would become 0.42

Explanation / Answer

selling price 800 unit 3000 sales 2400000 Variable cost 900000 contribution 1500000 fixed cost 650000 Ebit 850000 conntribution per unit 500 contribution margin 0.625 break even points in units fixed cost/ contribution margin per unit 1300 units contribution margin contribution/sales 0.625 break even in dollar fixed cost/ contribution margin per unit 2400000 break-even units for a target profit of $1,000,000 fixed cost+profit level/contribution margin per unit 2640000 break-even sales dollars for a target profit of $1,500,000 fixed cost+profit level/contribution margin per unit 3440000 safety margin in dollars at 3,000 units sales at 3000 - sales at BEP/unit selling price 1700 800 1360000 margin of safety above as a percentage of sales Current Sales Level – Breakeven Point 0.5666667 100 56.66667 percentage Current Sales Level

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