Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company\'s
ID: 2474366 • Letter: B
Question
Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year is as follows: Total Per Unit Sales $2,346,000 $46.00 Total variable cost 844,560 16.56 Contribution margin $ 1,501,440 $ 29.44 Total fixed cost 768,550 Operating income $ 732,890 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
Explanation / Answer
1.
2
3.
Additional Profit=160,000*64%=102,400
4.
Formulas/Calculation S. No. Item Formula Calculation Net Result 1 Break Even Units Fixed Cost / Contribution per unit 768550 / 29.44 26106