The Peace Company has the following functional income statement for the prior month.
|
Sales ($50 * 100,000 units)
|
|
|
|
Cost of goods sold
|
$5,000,000
|
|
|
Direct materials
|
$1,200,000
|
|
|
Direct labor
|
$950,000
|
|
|
Variable factory
|
$600,000
|
|
|
Fixed factory
|
$850,000
|
$3,600,000
|
|
Gross profit
|
$1,400,00
|
|
|
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?