Limerick Enterprises, Inc., is considering building a manufacturing plant in Dublin. Predicting sales of 100,000 units, Limerick
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Limerick Enterprises, Inc., is considering building a manufacturing plant in Dublin. Predicting sales of 100,000 units, Limerick estimates the following expenses:
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An Irish firm that specializes in marketing will be engaged to sell the manufactured product and will receive a commission of 10% of the sales price. None of the U.S. home office expense will be allocated to the Irish facility.
Required:
1. If the unit sales price is $2, how many units must be sold to break even?
2. Calculate the margin of safety ratio.
3. Calculate the contribution marginratio.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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1 Total Percent Fixed Percent Variable Expenses Fixed Expenses Variable Expenses Materials 19000 10 ...View the full answer
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