Question

Ariba Corporation reaches its breakeven point at $3,200,000 of revenues. At present, it is selling 105,000...

Ariba Corporation reaches its breakeven point at $3,200,000 of revenues. At present, it is selling 105,000 units and its variable costs are $30. Fixed manufacturing costs $800,000.

1. Compute the contribution margin percentage.              

2. Compute the selling price.                                             

3. Compute the margin of safety in units and dollars.     

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Answer #1

1) contribution margin = 25%

2) selling price per unit = $40

3) margin of safety

in units = 25000 units

In dollars = $1000,000

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