Big Foot produces sports socks. The company has fixed expenses of $85,000 and variable expenses of $1.20
1. Compute the contribution margin per package and the contribution margin ratio.
2. Find the break-even point in units and in dollars using the contribution margin shortcut approaches.
3. Find the number of packages Big Foot needs to sell to earn a $25,000 operating income.
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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