Question - Buchanan Singular sells phones for $150. The unit variable cost per phone is $35. Each phone also has a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500 per month.
Required:
a. What is the contribution margin per phone?
b. What is the breakeven point in phones per month? Breakeven point in sales dollars?
c. How many phones must be sold to earn an income of $20,000 for the year? What is the total revenue necessary to earn $20,000 income?
d. What is meant by "margin of safety?"