ABC Compagny is selling the unit of final product for $70. The projected income statement for 2014 follows:
Sales $4,000,000
Variable costs (2,000,000)
Contribution Margin 2,000,000
Fixed costs (1,500,000)
Pretax profit $ 500,000
a. Compute the contribution margin per unit and the number of units that must be sold to break even.
b. Compute the contribution margin ratio and the breakeven point in total revenue (in $).
c. What is the margin of safety in number of units?
d. Assume a tax rate of 25%. How many units must be sold to earn an after-tax profit of $300,000?