Sandoval Company makes radios that sell for $30 each. For the coming year, management expects fixed costs
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Sandoval Company makes radios that sell for $30 each. For the coming year, management expects fixed costs to total $200,000 and variable costs to be $20 per unit.
(a) Compute the break-even point in dollars using the contribution margin (CM) ratio.
(b) Compute the margin of safety ratio assuming actual sales are $750,000.
(c) Compute the sales dollars required to earn net income of $120,000.
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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Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso
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