Question

Information concerning a product produced by Ender Company appears here: $ $ 162 Sales price per unit Variable cost per unit Total annual fixed manufacturing and operating costs $491,400 Required Determine the following: a. Contribution margin per unit. Contribution margin per unit b. Number of units that Ender must sell to break even. Break-even in units c. Sales level in units that Ender must reach to earn a profit of $140,400. Sales in units

Answer 1

Ans. A	Contribution margin per unit = Selling price per unit - Variable cost per unit
	$162 - $84
	$78	per unit
Ans. B	Break even point in units   =    Total fixed cost / Contribution margin per unit
	$491,400 / $78
	6,300 units
Ans. C	Unit sales for target profit   =   (Fixed expense + Target profit) / Contribution margin per unit
	($491,400 + $140,400) / $78
	$631,800 / $78
	8,100 units
Ans. D	Margin of safety in units = Actual sales in units - Break even sales in units
	8,100 - 6,300
	1,800 units
	Margin of safety in dollars = Margin of safety in units * Selling price per unit
	1,800 * $162
	$291,600
	Margin of safety percentage = Margin of safety in units / Actual sales in units * 100
	1,800 / 8,100 * 100
	22.2%