Break-Even Units and Sales Revenue: Margin of Safety
Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,800,000 pages at a price of $0.08 each in the coming year. Product costs include:
Direct materials $0.015 Direct labor $0.004 Variable overhead $0.001 Total fixed overhead $80,000
There is no variable selling expense; fixed selling and administrative expenses total $46,000.
Required:
Note: In your computations that involve the contribution margin ratio, round the ratio to two decimal places.
1. Calculate the break-even point in units.
units
2. Calculate the break-even point in sales revenue.
$
3. Calculate the margin of safety in units for the coming year.
units
4. Calculate the margin of safety in sales revenue for the coming year.
$
5. What if the total selling and administrative expenses are reduced to $38,800? Recalculate the following:
a. Break-even point in units units b. Break-even point in sales revenue $ c. Margin of safety in units for the coming year units d. Margin of safety in sales revenue for the coming year $
Break-Even Units and Sales Revenue: Margin of Safety
Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 2,800,000 pages at a price of $0.08 each in the coming year. Product costs include:
Direct materials | $0.015 |
Direct labor | $0.004 |
Variable overhead | $0.001 |
Total fixed overhead | $80,000 |
There is no variable selling expense; fixed selling and administrative expenses total $46,000.
Required:
Note: In your computations that involve the contribution margin ratio, round the ratio to two decimal places.
1. Calculate the break-even point in units.
units
2. Calculate the break-even point in sales revenue.
$
3. Calculate the margin of safety in units for the coming year.
units
4. Calculate the margin of safety in sales revenue for the coming year.
$
5. What if the total selling and administrative expenses are reduced to $38,800? Recalculate the following:
a. Break-even point in units | units | |
b. Break-even point in sales revenue | $ | |
c. Margin of safety in units for the coming year | units | |
d. Margin of safety in sales revenue for the coming year | $ |