Sharp Company makes and sells pencil sharpeners. The variable cost of each sharpener is $20. The sharpeners are sold for $30 each. Fixed operating expenses amount to $40,000. a. Determine the break-even point in units and sales dollars. b-1. Determine the sales volume in units and dollars that is required to attain a profit of $12,000. b-2. Prepare an income statement using the contribution margin format to verify your answer. c. Determine the margin of safety between sales required to attain a profit of $12,000 and break-even sales.
Sharp Company makes and sells pencil sharpeners. The variable cost of each sharpener is $20. The sharpeners are sold for $30 each. Fixed operating expenses amount to $40,000. a. Determine the break-even point in units and sales dollars. b-1. Determine the sales volume in units and dollars that is required to attain a profit of $12,000. b-2. Prepare an income statement using the contribution margin format to verify your answer. c. Determine the margin of safety between sales required to attain a profit of $12,000 and break-even sales.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sharp Company makes and sells pencil
sharpeners. The variable cost of each
sharpener is $20. The sharpeners are sold
for $30 each. Fixed operating expenses
amount to $40,000. a. Determine the
break-even point in units and sales dollars.
b-1. Determine the sales volume in units
and dollars that is required to attain a profit
of $12,000. b-2. Prepare an income
statement using the contribution margin
format to verify your answer. c. Determine
the margin of safety between sales
required to attain a profit of $12,000 and
break-even sales.
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