Explain and show workSolutionSelling Price per unit 30 Vari

Explain and show work

Solution

Selling Price per unit = $30
Variable Costs per unit = $24
Fixed Costs = $58,200
Number of units sold = 22,600

Sales Revenue = Selling Price per unit * Number of units sold
Sales Revenue = $30 * 22,600
Sales Revenue = $678,000

Contribution Margin per unit = Selling Price per unit - Variable Costs per unit
Contribution Margin per unit = $30 - $24
Contribution Margin per unit = $6

Contribution Margin Ratio = Contribution Margin per unit / Selling Price per unit
Contribution Margin Ratio = $6 / $30
Contribution Margin Ratio = 20%

Breakeven Point in dollar = Fixed Costs / Contribution Margin Ratio
Breakeven Point in dollar = $58,200 / 20%
Breakeven Point in dollar = $291,000

Margin of Safety in percent = (Sales Revenue - Breakeven Point in dollar) / Sales Revenue
Margin of Safety in percent = ($678,000 - $291,000) / $678,000
Margin of Safety in percent = 57.08%