E$22\mathrm{.}17($LO $4,5),$ AP Glacial Company estimates that variable costs will be $62\mathrm{.}5\%$ of sales, and fixed costs will total $$600,000.$ The unit selling price of the product is $$4.$

Instructions

a$.$ Compute the break$-$even point in $(1)$ sales units and $(2)$ sales dollars.

b$.$ Prepare a CVP graph, assuming maximum sales of $$3,200,000.($Note: Use $$$00,000$ increments for sales and costs and $100,000$ increments for units.$)$

c$.$ Assuming actual sales are $$2$ million, compute the margin of safety $(1)$ in dollars and $(2)$ as a ratio.

Determine contribution margin ratio, break$-$even point in sales dollars, and margin of safety.