Kool-skinz Company manufactures custom-designed skins (covers) for iPods® and other portable MP3 devices. Variable costs are $10.80 per custom skin, the price is $18, and fixed costs are $66,960.

Required:

1. What is the contribution margin for one custom skin?

2. How many custom skins must Kool-skinz Company sell to break even?

3. IfKool-skinz Company sells 12,000 custom skins, what is the operating income?

4. Calculate the margin of safety in units and in sales revenue if 12,000 custom skins are sold.

LO1