Presque Isle Seating Co., a manufacturer of chairs, had the following data for 2011: Sales ........ 2,400

Question:

Presque Isle Seating Co., a manufacturer of chairs, had the following data for 2011:
Sales ........ 2,400 units
Sales price ...... $40 per unit
Variable costs ...... $14 per unit
Fixed costs ...... $19,500

Instructions
(a) What is the ratio?
(b) What is the break-even point in dollars?
(c) What is the margin of safety in dollars and as a ratio?
(d) If the company wishes to increase its total dollar by 40% in 2012, by how much will it need to increase its sales if all other factors remain constant?
(CGA adapted)

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...