Question

Can someone please provide me a step by step for how to solve this?

This particular problem does not include a "show me how" section for this question and i am stuck.

Thanks,

Khumbu Company's projected profit for the coming year is as follows: Total Per Unit Sales $3,067,875 $40.50 Total variable cost 981,720 12.96 Contribution margin $ 2,086,155 $ 27.54 Total fixed cost 1,128,978 Operating income $ 957,177 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 $240,000? 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 than expected. $ 4. For the projected level of sales, compute the margin of safety in units. units

Answer 1

1) Break even unit = Fixed cost/Contribution margin per unit = 1128978/27.54 = 40994 Units

2) Target unit = (1128978+240000)/27.54 = 49709 Units

3) Contribution margin ratio = 27.54/40.50 = 68%

Additional profit = 160000*68% = $108800

4) Margin of safety = Actual sales-Break even sales = 75750-40994 = 34756 Units