Select Page

a. Compute the Break-even point in units and total sales dollars using the contribution margin method.

Per Unit % of Sales

Sales \$100 100%

Variable Expense \$60 60%

Contribution Margin \$40 40%

Fixed Expense \$12,000

Break-even in units = __________

Break-even in total sales dollars = __________

b. Calculate the Break-even point in units and total sales dollars using the equation method.

Total Per Unit % of Sales

Sales \$90 100%

Variable Expense \$60 67%

Contribution Margin \$30 33%

Fixed Expense \$18,000

Break-even in units = __________

Break-even in total sales dollars = __________

c. Use the Contribution Margin Method to calculate Target Profit sales and units given a target profit of \$40,000.

Total Per Unit % of Sales

Sales \$250 100%

Variable expenses 170 68%

Contribution margin 80 32%

Fixed expenses 20,000

Target Profit Break-even units = _______________

Target Profit Break-even sales = _______________

d. Compute the Margin of Safety and the Margin of Safety Percentage from the data below.

Selling Price \$90 per unit

Variable Expense \$45 per unit

Fixed Expense \$18,000

Unit Sales 1,000 units

Margin of Safety ______________

Margin of Safety Percentage __________