Problem

Break-even analysis Refer to the current information for Bay Area Cycle Co. in Mini-...

Break-even analysis Refer to the current information for Bay Area Cycle Co. in Mini-Exercise 12.4.

Required:

Calculate Bay Area Cycle’s break-even point in units and total sales dollars.

Calculate Bay Area Cycle’s margin of safety and margin of safety ratio.

Refer to Mini-Exercise 12.4:

CVP analysis Current operating income for Bay Area Cycles Co. is $70,000. Selling price per unit is $100, the contribution margin ratio is 35%, and fixed expense is $280,000.

Required:

Calculate Bay Area Cycle’s per unit variable expense and contribution margin.

How many units are currently being sold? How many additional unit sales would be

necessary to achieve operating income of $105,000?

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