Total Per Unit       Revenue  $        480,000  $            30.00 Variable expenses            208,000                13.00 Contribution margin            272,000  $            17.00 Fixed expenses            216,000   Operating income  $          56,000   1. What is the monthly break-even point in units and in sales dollars? 2. What is the total contribution margin at breakeven? A Computation is not required for this. 3.How many units would have to be sold each month to earn a target profit of $104,000? Prepare a contribution margin format income statement to prove your answer

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5EB: Cadre, Inc., sells a single product with a selling price of $120 and variable costs per unit of $90....
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  Total Per Unit
     
Revenue  $        480,000  $            30.00
Variable expenses            208,000                13.00
Contribution margin            272,000  $            17.00
Fixed expenses            216,000  
Operating income  $          56,000  

1. What is the monthly break-even point in units and in sales dollars?

2. What is the total contribution margin at breakeven? A Computation is not required for this.

3.How many units would have to be sold each month to earn a target profit of $104,000? Prepare a contribution margin format income statement to prove your answer.

4.Redo part 3 but now assume a tax rate of 30%. How many units need to be sold each month to achieve an after-tax profit of $95,000?

5. Based on the original data supplied above, what is CVC's current margin of safety in both dollar and percentage terms?

6.If CVC increased sales by $50,000 per month and there is no change in total fixed expenses and variable expenses per unit, what should operate income increase by?

7.If sales were to increase by 15% what should operating income increase by (again no change in total fixed expenses and variable costs per unit)? Use operating leverage to answer this question. 

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