Hungry Hikers buys nutrition bars for \($1.25\) each and sells them for \($5.00.\) Management budgets monthly fixed expenses of \($12,675\) for sales volumes between 0 and 10,000 bars.

Requirements.

1. Use the contribution margin ratio approach to compute monthly break-even sales in revenue (dollars).

2. Use the unit contribution margin approach to compute monthly break-even sales in units.

3. Compute the monthly sales level (in units) required to earn a pre-tax target operating profit of \($15,000.\)

4. Assume Hungry Hikers wants to earn an after-tax monthly net income of \($18,000\) when the income tax rate is 25%. Compute the monthly sales level (in units) to achieve the after-tax net income target.

5. Assuming a no-tax environment, calculate the margin of safety in dollars at sales level of 7,400 units.