Question

Suppose McKnight Corp.’s breakeven point is revenues of $ 1,500,000. Fixed costs are $ 720,000.

Required
1. Compute the contribution margin percentage.
2. Compute the selling price if variable costs are $ 13 per unit.
3. Suppose 85,000 units are sold. Compute the margin of safety in units and dollars.
4. What does this tell you about the risk of McKnight making a loss? What are the most likely reasons for this risk to increase?



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  • CreatedJanuary 15, 2015
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