Question

Break-E Khumbu Company's projected profit for the coming year is as follows: Total Per Unit $41.00 10.66 $ 30.34 Sales $1,834,750 477,035 $ 1,357,715 424,561 $933,154 Total variable cost Contribution m argirn Total fixed cost Operating income Required: 1. Compute the break-even point in units. If required, round your answer to nearest whole value. units 2. How many units must be sold to earn a profit of $240,0007 If required, round your answer to nearest whole value. units 3. Compute the contribution margin ratio. If required, round your answer to nearest whole number. Using the rounded ratio from above, compute the additional profit that Khumbu would earn if sales were $160,000 more thar ernected

Answer 1

	1)	Break even (units)
		fixed cost/contribution margin
		424,561/30.34
		13993	units
	2)	Break even (units)
		(fixed cost+target profit)/contribution margin
		(424,561+240,000)/30.34
		21904	units
	3)	Contribution margin ratio
		contribution/sales
		30.34/41
		74%
	4)	Margin of safety
		actual sales - break even sales
		(1,834,750/41)-13,993
		30757	units