1. David Tan, sales director, of Pubs Toy Ltd, negotiated with a new customer on the volume and selling price of its popular product Monster Craz. David has been informed of the costs of manufacturing the product variable production cost $15 each and fixed production overhead $4,000,000 for the expected volume between 40,000 units and 80,000 units. Selling and administrative variable and fixed expenses are $3 per unit and $40,000 for the same expected volume range. David expected to sell 50,000 units of Monster Craz. How much is the minimum price for the deal, if a minimum targeted profit of $500,000 is expected?

a.Compute the CM ratio and variable expense ratio

b.Compute the break-even

c. Compute the margin of safety

d.Compute the degree of operating leverage