1). Contribution margin

Particulars	Current year	Project year (10% increase)
Sale	2,000,000	2,200,000
Less: variable cost
Direct material	498,000	547,800
Direct labour	600,200	660,220
Selling expense (40%)	84,000	92,400
Administrative expense (20%)	56,000	61,600
Manufacturing overhead (70%)	261,800	287,980
Contribution margin	500,000	550,000
Contribution margin%	25%	25%

2). Fixed cost

Selling expense (60%)	126,000
Administrative expense (80%)	224,000
Manufacturing overhead (30%)	112,200
Total fixed cost	462,200

3. The company has a target net income of $206,000. What is the required sales in dollars for the company to meet its target?

Sales dollars required for target net income

2672800

4. Please tell me if my calculation are correct for the final part:

Below is the calculation I got for the ratio. Is this correct? If not, please show me how to get the correct answer.

(d) If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin of safety ratio? (Round answer to 1 decimal place, 6.3. 10.5.} Margin of safety ratio ' 2:1 % eTextbook a nd Media Save for Later Attempts: 0 Of 3 used Submit