MURDER TO GO! writes and manufactures murder mystery parlor games that it sells

Question

MURDER TO GO! writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per-unit information relating to the manufacture and sale of this product Unit sales price Variable cost per unit Fixed costs per year 30 360,000 a. Determine the contribution margin ratio. b. Determine the sales volume (in dollars) required to break even. c. Determine the sales volume (in dollars) required to earn an annual operating income of $440,000. d. Determine the margin of safety (in dollars) if annual sales total 60,000 units. e. Determine the operating income if annual sales total 60,000 units. a. Contribution margin ratio b. Break-even dollar sales volume c. Target sales revenue d. Margin of safety sales volume e. Operating income

Explanation / Answer

a Contribution margin ratio=(30-6)/30= 80% b Break even dollar sales volume=360000/80%= $450000 c Target sales revenue=(360000+440000)/80%= $1000000 d Margin of safety sales volume=(60000*30)-450000= $1350000 e Operating income=60000*(30-6)-360000= $1080000

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