Question

specifically number 3 please Last month, Laredo Company sold 540 units for $34 each. During the...

specifically number 3 please

Last month, Laredo Company sold 540 units for $34 each. During the month, fixed costs were $2,700 and variable costs were $14 per unit.

Required:
1. Determine the unit contribution margin and contribution margin ratio. (Round your Contribution Margin Ratio to the nearest whole percentage.)



2. Calculate the break-even point in units and sales dollars. (Round your answers to the next whole number.)



3. Compute Laredo’s margin of safety in units and as a percentage of sales. (Round your Percentage of Sales answer to 4 decimal places (i.e. .123456 should be entered as 12.3456%))

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Answer #1
1. Determine the unit contribution margin and contribution margin ratio.
contribution margin =Sales price-Variable cost =34-14 =$20
contribution margin ratio =contribution margin/sales =20/34 =58.82%
2Calculate the break-even point in units and sales dollars
break-even point in units =Fixed Cost\Contrbution Margin =2700/20 =135 units
sales dollars =135*34 =4590
3Compute Laredo’s margin of safety in units and as a percentage of sales.
margin of safety in units(Sales-break even sales) =540-135=405 Units
Percentage of Sales =405/540 =75%
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