Question

Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45...

Unit sales 20,000 units

Selling price per unit $60 per unit

Variable expenses per unit $45 per unit

Fixed expenses $240,000

CVP Relationships Compute the CM ratio

Selling price per unit Variable expenses per unit =

Contribution margin per unit =

CM ratio =

Compute the break-even

Break-even in unit sales=

Break-even in dollar sales=

Compute the margin of safety

Margin of safety in dollars=

Margin of safety percentage=

Homework Answers

Answer #1
Following are the inputs given:
Sales(in units) 20,000
Slling price per unit $60
Variable exp per unit $45
Fixed Expenses $240,000
Sales (In value)- 20000*60 $1,200,000
Computation of:
1 CM Ratio
Slling price per unit $60
Variable exp per unit $45
Contribution margin per unit $15
CM Ratio
(Contribution margin per unit/Selling Price per unit) 25%
Variable expense ration 75%
2 Break even(BEP)
In units
(Fixed cost/contribution margin per unit) 16000
In Value
Break even in units * selling price per unit $960,000
3 Margin of safety(MOS)
In value
(sales value - Break even in value) $240,000
In Percentage
MOS in value/Sales value 20%
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