Lika AG makes radios that sell for 30 each. For the coming year, management expects fi xed
Question:
Lika AG makes radios that sell for €30 each. For the coming year, management expects fi xed costs to total €220,000 and variable costs to be €18 per unit.
a. Compute the break-even point in sales using the contribution margin (CM) ratio.
b. Compute the margin of safety ratio assuming actual sales are €800,000.
c. Compute the sales required to earn net income of €140,000.
Contribution MarginContribution 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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a CM per unit Unit selling price Unit variable costs 12 30 ...View the full answer
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Related Book For 
Accounting Principles
ISBN: 978-1119419617
IFRS global edition
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt
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