Question - Kate is considering going into business producing music books to sell to elementary schools. She has an offer from a publication firm that will charge her $5,000 setup fee and $1.50 per book. She estimates that she can sell; each book for $4.00. She plans to sell 3,500 books.
A. What is the contribution margin per book?
B. Prepare a contribution margin income statement.
C. How many books does Kate need to sell in order to break even?
D. Assume that Katie wants to earn a profit of $4,000. Calculate the number of books Katie needs to sell to earn a desired profit of $4,000.
E. Assume that Katir estimates that she can sell 3,500 books. What is Katie's margin of safety in number of units?