Miller Metal Co. makes a single product that sells for $44.5 per unit. Variable
ID: 2339503 • Letter: M
Question
Miller Metal Co. makes a single product that sells for $44.5 per unit. Variable costs are $27.3 per unit, and fixed costs total $65,390 pe Required: a. Calculate the number of units that must be sold each month for the firm to break-even. (Do not round intermediate calculations.) Break-even volumenits b. Assume current sales are $414,000. Calculate the margin of safety and the margin of safety ratio. (Round intermediate calculations to the nearest whole number.) Margin of safety Margin of safety ratio c. Calculate operating income if 6,700 units are sold in a month. (Do not round intermediate calculations.)Explanation / Answer
a) Break even units = fixed cost / cont per unit
= 65390/ (44.5-27.3) = 3802 units
b) Total sales = 414000
Break even sales = 3802*44.5 = 169189
MOS Sale = total - breakeven = 414000 - 169189 = 244811
MOS % = 244811/414000 = 59.13%
c) Contribution = units*(selling price - variable cost)
= 6700 * (44.5-27.3) = 115240
Income = contribution - fixed cost = 115240 - 65390 = 49850
d) contributionper unit = sp - vc = 47.5 - 27.3 = 20.2
Total cont = 20.2 * 7300 = 147460
OP income = 147460 - 65390 - 7500 = 74570
NOTE = WE CAN ONLY ANSWER 4 Q AT A TIME