Question

Jasmine Inc. sells a product for $56 per unit. Variable costs per unit are $33, and monthly fixed costs are $211,600. a. What is the break-even point in units? Break-Even Point units b. What unit sales would be required to eam a target profit of $75,900? Total Required Sales units c. Assume they achieve the level of sales required in part b, what is the margin of safety in sales dollars? Margin of Safety

Answer 1

Working Related information : Selling Price Variable cost per unit Fixed cost to toto 56.00 33.00 211,600.00 Contribution margin per unit : Selling Price Less : Variable cost per unit 56.00 (33.00) Contribution margin per unit 23.00 Contribution margin ratio : Formula : Contribution per unit / selling price per unit *100 41% Requirement A Break even point (units) - Fixed cost / contribution per unit (211600)/23 9200 Units Requirement B Total required sales) - Fixed cost + Target profit / contribution margin ratio (211600+75900)/41% $ 700,000.00 Requirement C Total Sales Less : Break even sales at above level Margin of safety $ $ $ 700,000.00 515,200.00 184,800.00