Question: Break-Even Units, Contribution Margin Ratio, Margin of Safety Tensing Company's projected profit for the coming year is as follows:
Total Per Unit
Sales $11,700,000 $20
Total variable cost 8,190,00 12
Contribution margin $ 3,510,000 $ 8
Total fixed cost 2,254,200
Operating income $ 1,255,800
Required: 1. Compute the break-even point in units.
2. How many units must be sold to earn a profit of $450,000?
3. Compute the contribution margin ratio. Using that ratio, compute the additional profit that Tensing would earn if sales were $37,000 more than expected.
4. For the projected level of sales, compute the margin of safety in units.