Sherpa Manufacturing has the following income statement for 6,000 units: Sales $600,000 Variable costs 360,000 Contribution margin 240,000 Fixed costs 80,000 Net income $160,000 Using the information above: a. At what sales volume (in sales dollars) does Sherpa break even? b. At what sales volume (in units) does Sherpa break even? c. Given the income statement above, compute the margin of safety.
Sherpa Manufacturing has the following income statement for 6,000 units:
Sales $600,000
Variable costs 360,000
Contribution margin 240,000
Fixed costs 80,000
Net income $160,000
Using the information above:
a. At what sales volume (in sales dollars) does Sherpa break even?
b. At what sales volume (in units) does Sherpa break even?
c. Given the income statement above, compute the margin of safety.
d. What level of sales volume must be attained to reach net income of $200,000?
e. What level of sales volume must be attained to reach net income of $180,000, assuming Sherpa had to pay income taxes at a rate of 40%?
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