Presto Company makes radios that sell for $30 each. For the coming year, management expects fixed costs

Question:

Presto Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $18 per unit.
(a) Compute the break-even point in dollars using the (CM) ratio.
(b) Compute the margin of safety ratio assuming actual sales are $800,000.
(c) Compute the sales dollars required to earn net income of $140,000.

Contribution Margin
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...