Cheetah Company manufactures custom-designed skins (covers) for iPods® and other portable MP3 devices. Variable costs are $11.70 per custom skin, the price is $18, and fixed costs are $152,460. Required: 1. What is the contribution margin for one custom skin? Round your answer to the nearest cent. per custom skin 2. How many custom skins must Cheetah Company sell to break even? custom skins 3. If Cheetah Company sells 25,000 custom skins, what is the operating income? 4. Calculate the margin of safety in units and in sales revenue if 25,000 custom skins are sold. Margin of safety in units Margin of safety in sales revenue units
Cheetah Company manufactures custom-designed skins (covers) for iPods® and other portable MP3 devices. Variable costs are $11.70 per custom skin, the price is $18, and fixed costs are $152,460. Required: 1. What is the contribution margin for one custom skin? Round your answer to the nearest cent. per custom skin 2. How many custom skins must Cheetah Company sell to break even? custom skins 3. If Cheetah Company sells 25,000 custom skins, what is the operating income? 4. Calculate the margin of safety in units and in sales revenue if 25,000 custom skins are sold. Margin of safety in units Margin of safety in sales revenue units
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![### Contribution Margin, Break-Even Units, Contribution Margin Income Statement, Margin of Safety
**Scenario:**
Cheetah Company manufactures custom-designed skins (covers) for iPods® and other portable MP3 devices. Variable costs are $11.70 per custom skin, the price is $18, and fixed costs are $152,460.
**Required:**
1. **What is the contribution margin for one custom skin?** *Round your answer to the nearest cent.*
\[\ \boxed{\$ \_\_\_\_\_} \ \text{per custom skin}\]
2. **How many custom skins must Cheetah Company sell to break even?**
\[\text{\boxed{ \_\_\_\_\_ \text{ custom skins }}}\]
3. **If Cheetah Company sells 25,000 custom skins, what is the operating income?**
\[\ \boxed{\$ \_\_\_\_\_} \]
4. **Calculate the margin of safety in units and in sales revenue if 25,000 custom skins are sold.**
* Margin of safety in units
\[\ \boxed{ \_\_\_\_\_} \ \text {units} \]
* Margin of safety in sales revenue
\[\ \boxed{\$ \_\_\_\_\_} \]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff523dc8a-9051-46da-af12-e46643d993ab%2Fcc2088b8-a391-4346-a559-adb2ffa5fac1%2Frlo2o9o_processed.png&w=3840&q=75)
Transcribed Image Text:### Contribution Margin, Break-Even Units, Contribution Margin Income Statement, Margin of Safety
**Scenario:**
Cheetah Company manufactures custom-designed skins (covers) for iPods® and other portable MP3 devices. Variable costs are $11.70 per custom skin, the price is $18, and fixed costs are $152,460.
**Required:**
1. **What is the contribution margin for one custom skin?** *Round your answer to the nearest cent.*
\[\ \boxed{\$ \_\_\_\_\_} \ \text{per custom skin}\]
2. **How many custom skins must Cheetah Company sell to break even?**
\[\text{\boxed{ \_\_\_\_\_ \text{ custom skins }}}\]
3. **If Cheetah Company sells 25,000 custom skins, what is the operating income?**
\[\ \boxed{\$ \_\_\_\_\_} \]
4. **Calculate the margin of safety in units and in sales revenue if 25,000 custom skins are sold.**
* Margin of safety in units
\[\ \boxed{ \_\_\_\_\_} \ \text {units} \]
* Margin of safety in sales revenue
\[\ \boxed{\$ \_\_\_\_\_} \]
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