Homework Answers
a) Contribution margin ratio
Unit contribution margin = 2*40% = 0.80
Unit Selling price = 2
Contribution margin ratio = 0.80/2 = 40%
b) Break even Sales dollars
Fixed cost = 535000
Contribution margin ratio = 40%
Break even Sales = 535000/.40 = $1337500
c) Sales required
Fixed cost = 535000
target income = 500000
Total Fixed cost+Target income = 1035000
Contribution margin ratio = 40%
Sales dollars required = 1035000/.40 = 2587500
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fixed manufacturing costs are $462,000, and fixed selling and
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Determine the break-even point in units and dollars using each
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