Question

please complete the entire question, try and use the same format if possible

Current operating income for Bay Area Cycles Co. is $44,000. Selling price per unit is $100, the contribution margin ratio is 20%, an fixed expense is $176,000. Required: 1. Calculate Bay Area Cycle's breakeven point in units and total sales dollars. Break-even units Break-even dollars 2. Calculate Bay Area Cycle's margin of safety and margin of safety ratio. Margin of safety Margin of safety ratio-

Answer 1

Sales Units Selling Price Per unit Varaibel Expense Per unit (80% of Sales ) Fixed Expenses Sales Revenue =(176000+44000)/20 *100 11000 Units 100 Per unit 80 Per unit 176000 1100000 20.00 Per unit 20.00% Contribution Margin per unit ( Selling Price - Varible Cost)(100-80) CM Ratio =( CM/Selling Price) Compute the Break Even point Break Even in Unit Sales =( Fixed Cost / CM Per unit) Brake Even in Dollar sales =( Fixed Cost/ CM ratio) Compute the Margin of Safety Margin of Safety in dollars =(units *selling price - BEP Dollars) Margin of Safety in Percentage =(Margin of safety Dollars/ Actual sales) 8800 880000 Dollars 220000 20%