This is problem 3-23A in Performance Measurement & Accounting Systems 7th edition-Managerial Accounting

Rosenthal Company makes and sells products with variable costs of $24 each. Rosenthal incurs annual fixed costs of $315,000. The current sales price is $87.

Required:

The following requirements are interdependent. For example, the $252,000 desired profit introduced in Requirement c also applies to subsequent requirements. Likewise, the $80 sales price introduced in Requirement d applies to the subsequent requirements.

a.	Determine the contribution margin per unit.

b-1.	Determine the break-even point in units and in dollars.

b-2.	Prepare an income statement using the contribution margin format.

c-1.	Suppose that Rosenthal desires to earn a $252,000 profit. Determine the sales volume in units and dollars required to earn the desired profit.

c-2.	Prepare an income statement using the contribution margin format.

d-1.	If the sales price drops to $80 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.

d-2	Prepare an income statement using the contribution margin format.

e-1.	If fixed costs drop to $280,000, what level of sales is required to earn the desired profit? Express your answer in units and dollars.

e-2.	Prepare an income statement using the contribution margin format.

f-1.	If variable cost rises to $30 per unit, what level of sales is required to earn the desired profit? Express your answer in units and dollars.

f-2.	Prepare an income statement using the contribution margin format.

g.	Assume that Rosenthal concludes that it can sell 10,000 units of product for $80 each. Recall that variable costs are $30 each and fixed costs are $280,000. Compute the margin of safety in units and dollars and as a percentage.