Compute margin of safety percentage assuming actual sales

Question

Question:

1. Mabo Company makes calculators that sell for $20 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $9 per unit.

 

(a) Compute break-even point in dollars using the contribution margin (CM) ratio.

 

(b) Compute the margin of safety percentage assuming actual sales are $500,000.

 

(c) Compute the sales required in dollars to earn net income of $165,000.