Pánafo Estilos Determine the break-even point in units. Determine the sales volu

Question

Pánafo Estilos Determine the break-even point in units. Determine the sales volume in units and dollars that is required to a desired profit of $32,000. Determine the margin of safety between sales required to desired profit of $32,000 and break-even sales. a. b. c. Income Statement for Exercise 4, if applicable: Units Revenues ($ Variable Cost ($x S Fixed Cost Net Income Income Statement for Exercise 4, if applicable: Units ) S -S Revenues (S Variable Cost {$_-x Contribution Margin S Fixed Cost Net Income

Explanation / Answer

Selling Price Per Unit (a) $4.00 Contribution margin per Unit (b) $1.00 Variable Cost per Unit (a-b) $3.00 Fixed Cost $1,10,000.00 a BEP in Units = Fixed Cost / Contribution margin per Unit = 110000/1 = 110000 Units Contribution margin Ratio = Contribution margin /Sales = $ 1 / $ 4 = 25 % BEP in Dollars   = Fixed Cost / Contribution margin Ratio = 110000/25% = $ 440000 Units required to be sold to earn a profit of $ 32000 b Required unit to be sold = (Fixed Cost + Desired Profit) /Contribution margin per Unit = (110000+ 32000)/1 = 142000 Units Required Sales (in Dollars) = (Fixed Cost + Desired Profit) /Contribution margin Ratio = (110000+ 32000)/25% = $ 568000 c Margin of Safety = Actual/Desired Sales - BEP Sales Margin of Safety (in Units) = 142000 Units - 110000 Units = 32000 Units Margin of Safety (in Dollars) = $ 568000 - $ 440000 Units = $ 128000

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