Exercise 16.8 (Algorithmic) Contribution Margin, Break-Even Units, Contribution Margin Income Statement, Margin of Safety

Zebra Company manufactures custom-designed skins (covers) for iPods and other portable MP3 devices. Variable costs are $6.60 per custom skin, the price is $12, and fixed costs are $62,100.

Required:

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

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

3. If Zebra Company sells 12,000 custom skins, what is the operating income? $

4. Calculate the margin of safety in units and in sales revenue if 12,000 custom skins are sold.

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