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Blossom Company makes radios that sell for $30 each. For the coming year, management expects fixed...

Blossom Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $210,000 and variable costs to be $18 per unit. (a) Your answer has been saved. See score details after the due date. Compute the break-even point in dollars using the contribution margin (CM) ratio. Break-even point $Type your answer here 525000 eTextbook and Media Attempts: 1 of 1 used (b) Compute the margin of safety ratio assuming actual sales are $700,000. (Round margin of safety ratio to 2 decimal places, e.g. 10.50.) Margin of safety Type your answer here %

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Answer #1

Contribution margin per unit = Selling price per unit - Varaible cost per unit

= $30 - $18

= $12

Contribution margin ratio = Contribution margin per unit / Selling price per unit

= $12 / $30

= 0.4

(a) Break-even point in dollars = Fixed costs / Contribution margin per unit

= $210,000 / 0.4

= $525,000

(b) Margin of safety = Sales - Break even sales

= $700,000 - $525,000

= $175,000

Margin of safety ratio = Margin of safety / Sales * 100

= $175,000 / $700,000 * 100

= 25%

= $

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