Instruction Sheet Needed Pumbaas annual breakeven point in u

(Instruction Sheet Needed) Pumbaa\'s annual breakeven point in units sold is: O 3,000 units O 4,000 units O 5,231 units O 1,000 units: ? Question 1.7 (Instruction Sheet Needed) Pumbaa\'s current margin of safety in units is: O 3,000 units O 5.231 unts | 0 1,000 units: O 4,000 units ? Question 1.8 (Instruction Sheet Needed) Pumbaa\'s degree of operating leverage is:

Solution

1. Computation of Break Even Point

Contribution Margin per Unit = Sales - Variable expenses / Units Sold

Contribution Margin per Unit = $120000 - $68000 / 4000

Contribution Margin per Unit = $52000 / 4000

Contribution Margin per Unit = $13 per unit

BEP = Fixed Expenses / Contribution per unit

Annual BEP = $39000 / $13 = 3000 Units

2. Margin of Saftey = Units Sold - BEP Units = 4000 Units - 3000 Units = 1000 Units

3. Degree of Operating Leverage = Contribution / Net Profit = $52000 / $13000 = 4