Embleton Company estimates that variable costs will be 60% of sales, and fixed costs will total $800,000.

Question:

Embleton Company estimates that variable costs will be 60% of sales, and fixed costs will total $800,000. The selling price of the product is $4.
Instructions
(a) Prepare a CVP graph, assuming maximum sales of $3.2 million. (Note: Use $400,000 increments for sales and costs, and 100,000 increments for units.)
(b) Calculate the break-even point in (1) units and (2) dollars.
(c) Assuming actual sales are $2.5 million, calculate the margin of safety in (1) dollars and (2) as a ratio.