Estimated VC per unit Estimate FC

Production Costs:

DM $ 8.05 ----

DL 4.80 ----

FOH 1.95 $ 83,250

Selling Expenses:

Sales Salaries and Commission 1.20 32,300

Advertising ---- 7,500

Travel ---- 2,300

Miscellaneous Selling Expense 1.10 4,200

Administrative Expenses

Office and Officers' Salaries ---- 86,400

Supplies .50 5,900

Miscellaneous Administrative Expense 2.20 1,500

The company expects to maintain the same inventories at the end of 2019 as at the beginning of the year.

It is expected that 25,000 units will be sold at $32 per unit.Maximum sales within the relevant range are 35,000 units.

REQUIRED:

1. Contribution Margin Income Statement
2. Traditional Income Statement
3. What is the expected contribution margin per unit? Contribution martin ratio?
4. Determine Break Even in Units and Sales
5. What is the expected Margin of Safety?
6. What is the Operating Leverage?

Answer rating: 100% (QA)

To solve this problem well first calculate the contribution margin per unit and contribution margin ratio Then well determine the breakeven point in u... View the full answer