Cheetah Company manufactures custom-designed skins (covers) for iPods and other portable MP3 devices. Variable costs are $8.40 per custom skin, the price is $12, and fixed costs are $94,320.

Required:

1. What is the contribution margin for one custom skin? Round your answer to the nearest cent. $

2. How many custom skins must Cheetah Company sell to break even?

3. If Cheetah Company sells 27,000 custom skins, what is the operating income? $

4. Calculate the margin of safety in units and in sales revenue if 27,000 custom skins are sold.

Margin of safety in units		units
Margin of safety in sales revenue	$

Answer rating: 100% (QA)

1 Contribution Margin for One Custom Skin Contribution Margin Selling Price Variable Cost Contributi... View the full answer