E6-10 (Algo) Calculating Contribution Margin, Contribution Margin Ratio, Margin of Safety [LO 6-2, 6-3]

Last month, Laredo Company sold 540 units for $70 each. During the month, fixed costs were $4,704 and variable costs were $42 per unit.

Required:

1. Determine the unit contribution margin and contribution margin ratio.

2. Calculate the break-even point in units and sales dollars.

3. Compute Laredos margin of safety in units and as a percentage of sales.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Determine the unit contribution margin and contribution margin ratio. (Round your Contribution Margin Ratio to the nearest whole percentage.)

Unit Contribution Margin
Contribution Margin Ratio		%

• Required 2
• Required 3

Calculate the break-even point in units and sales dollars. (Round your answers to the nearest whole number.)

Break-Even Units		Units
Break-Even Sales Dollars

• Required 3

Compute Laredos margin of safety in units and as a percentage of sales. (Round your intermediate calculations to the nearest whole number. Round your Percentage of Sales answer to 4 decimal places (i.e. 0.123456 should be entered as 12.3456%)).

Margin of Safety		Units
Margin of Safety as Percentage of Sales		%