1. Contribution margin per unit = Selling price per unit - Variable costs per unit
= $500 - $185
= $315
Break-even point in units = Fixed costs / Contribution margin per unit
= $178,500 / $315
= 567 units
Break-even sales dollars = 567 units * $500
= $283,500
2. Margin of safety in units = Sales in units - Break-even sales in units
= 1,560 - 567
= 993
Percentage of sales = Margin of safety / Sales * 100
= 993 / 1,560 * 100
= 63.65%
3. Sales in units = (Fixed costs + Desired profit) / Contribution margin per unit
= ($178,500 + $120,000) / $315
= 948
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required...
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