MURDER TO GO! writes and manufactures murder mystery parlor games that it sells to retail stores. The following is per-unit information relating to the manufacture and sale of this product:
Unit sales price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30
Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fixed costs per year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .360,000
Sales price per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 90
Variable cost per unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Total fixed manufacturing and operating costs (per month) . . . . . . . . . . . . . . . . . . . 650,000
The following is information concerning
Determine the following, showing as part of your answer the formula that you used in your computation.
For example, the formula used to determine the contribution margin ratio (part a ) is:
Contribution Margin Ratio = Unit Sale Price - Variable Cost per Unit / Unit Sale Price
a. Contribution margin ratio.
b. Sales volume (in dollars) required to break even.
c. Sales volume (in dollars) required to earn an annual operating income of $440,000.
d. The margin of safety (in dollars) if annual sales total 60,000 units.
e. Operating income if annual sales total 60,000 units.