eBook Calculator Print Item Break-Even Units, Contribution Margin Ratio, Margin

Question

eBook Calculator Print Item Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year is as follows: Total Per Unit $24.50 8.33 16.17 Sales $1,078,000 366,520 $711,480 362,855 348,625 Total variable cost Contribution margin Total fixed cost Operating income Required: Compute the break-even point in units. If required, pund your answer to nearest whole value. units 2. How many units must be sold to earn a profit of $240,0007 If required, round your answer to nearest whole value. units 3. Compute the contribution margin ratio. If required, round your answer to nearest whole number Using the rounded ratio from above, compute the additional profit that Khumbu would eam if sales were $160,000 more than expected. Check My Work 3 more Check My Work uses remaiaing

Explanation / Answer

Ans:

1.       Break -even point in units= Fixed cost/Contribution margin per unit

                                               =362855/$16.17

                                               =22440 units

2.       Profit +Fixed costs= Contribution margin

$240000+$362855=$602855

Number of units to be sold=$602855/$16.17

                                               = 37282 units

3.       Contribution margin ratio= $8.33/$24.50

                                             = 34%

Additional profit=$160000*34%=$54400

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