Lester Company manufactures a single product. Each unit sells for $15. The firm's projected costs are listed below: Variable costs per unit: Direct Material Direct Labor Variable Mfg. Overhead $3.00 $1.50 $1.00 Variable Selling $0.50 Fixed costs: Fixed Mfg. Overhead $120,000 Fixed Selling $ 60,000
1. Calculate the Breakeven Point in Units and in Dollars
2. Calculate how many Units and Dollars must Lester Company sell to make a target profit of $75,000?
3. Prove your answer from question (b) by preparing a Contribution Approach Income Statement.
4. At this level of sales, what is Lester Company’s Degree of Operating Leverage?
5. At this level of sale, what is Lester Company’s Margin of Safety in Units and Dollars?