The Peace Company has the following functional income statement for the prior month.
Sales ($50 * 100,000 units) $5,000,000
Cost of goods sold
Direct materials $1,200,000
Direct labor $950,000
Variable factory overhead $600,000
Fixed factory overhead $850,000 $3,600,000
Gross profit $1,400,000
Selling and administrative expense
Variable
Fixed
Operating income
There were no beginning and ending inventories.
Required:
a.Calculate the contribution margin per unit.
b. Calculate the contribution margin ratio.
c.What is the break-even point in units?
d.What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?