Question

Question: Do It! Review 19-1 Your answer is partially correct. Try again. V... See this question in the app Do It! Review 19-1 Your answer is partially correct. Try again. Victoria Company reports the following operating results for the month of April.

VICTORIA COMPANY CVP

Income Statement For the Month Ended April 30, 2017 Total Per Unit Sales (9,500 units) $437,000 $46 Variable costs 218,500 23.00 Contribution margin 218,500 $23.00 Fixed expenses 179,400 Net income $39,100 Management is considering the following course of action to increase net income: Reduce the selling price by 10%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 10%. Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.) (a) Assuming no changes to selling price or costs. Break-even point units Break-even point $ Margin of safety $ (b1) Assuming changes to sales price and volume as described above. Break-even point units Break-even point $ Margin of safety $

Answer 1

break even point in units = fixed costs / contribution margin per unit

break even point in sales dollars= fixed cost / contribution margin ratio

margin of safety = actual sales dollars- break even point in dollars