Beauty Supplies Company manufactures and sells several ranges of artwork. The average revenue and cost of sales are as follows:

Selling price per unit $30.00 Variable costs per unit:
Direct materials $7.00
Direct manufacturing labor $2.40
Manufacturing overhead $0.60
Selling costs $3.00
Annual fixed costs $108,000

a) Calculate the contribution margin per unit.

b) Calculate the number of units Beauty Supplies Company must sell each year to break even.

c) Calculate the number of units Beauty Supplies Company must sell to yield a profit of $160,000.

d) Managers may use Sensitivity analysis in their accounting system.

i) What is sensitivity analysis?
ii) How is Sensitivity analysis useful to managers?

Answer rating: 100% (QA)

a Contribution margin per unit is equal to 3000 700 240 060 300 1700 b At break even point cost ... View the full answer