Problem
ACME Incorporated operating results for the previous year were as follows:
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Sales (7,000 units)
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$84,000
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Manufacturing costs:
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|
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Variable
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19,600
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Fixed
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30,000
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Selling and Administrative costs:
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|
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Variable
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14,000
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Fixed
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6,000
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Task
A. Calculate both the contribution margin per unit and contribution margin ratio.
B. Calculate the breakeven point in both unit sales and sales dollars (round to whole number).
C. a. Calculate the margin of safety in units.
b. What does your answer to part a. above indicate to management?
D. Estimate the change in operating income if the company increases total sales by $18,000 (do not create an income statement).