Problem:
Hardwood Seating Co., a manufacturer of chairs, had the following data for 2012.
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Sales
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2,400 units
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Sales price
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$40 per unit
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Variable costs
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$14 per unit
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Fixed costs
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$19,500
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Instructions
(a) What is the contribution margin ratio?
(b) What is the break-even point in dollars?
(c) What is the margin of safety in dollars and as a ratio?
(d) If the company wishes to increase its total dollar contribution margin by 40% in 2013, by how much will it need to increase its sales if all other factors remain constant?