Homework Answers
Total fixed cost = 480,000 + 85,000 + 100,000
= 665,000
Selling price per unit = $3.0
Variable cost per unit = $3 x 60% = $1.8
(a) Contribution margin ratio :-
Unit contribution margin = 3.0 - 1.8 = 1.2
Unit selling price = 3.0
Contribution margin = 1.2/3.0 x 100 = 40%
(b) Breakeven point in dollar :-
Fixed cost = 665,000
Contribution margin ratio = 40%
Breakeven = 665,000/40% = $1,662,500
(c) Sales Required to earn target income :-
Fixed cost = 665,000
Target income = 850,000
Total = 1,515,000
Contribution margin ratio = 40%
Required sales = 1,515,000/40% = $3,787,500
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