Suppose Lattin Corp.’s breakeven point is revenues of $1,500,000. Fixed costs are $720,000.
1. Compute the contribution margin percentage.
2. Compute the selling price if variable costs are $ 13 per unit.
3. Suppose 90,000 units are sold. Compute the margin of safety in units and dollars.
4. What does this tell you about the risk of Lattin making a loss? What are the most likely reasons for this risk to increase?