Halifax Products sells a product for $108. Variable costs per
unit are $55, and monthly fixed costs are $111,300.
a. What is the break-even point in units?
b. How many units would need to be sold to earn a target profit of $206,700?
c. Assuming they achieve the level of sales required in part b, what is the margin of safety in sales dollars?
|b||Units required for profit of $206700|
|c||Sales at 6000 Units||6000*108|
|Sales at 6000 Units||$ 648,000|
|Sales at Break-Even||2100*108|
|Sales at Break-Even||$ 226,800|
|Margin of Safety||Actual Sales - Break-Even Sales|
|Margin of Safety||$ 421,200|
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