16:40 ALGO break-even in units and sales dollars, margin of safety

Drake company produces a single product. last years income statement is as follows:

1. compute the break-even point in units and sales revenue. in your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal places. round your final answers to the nearest whole unit or dollar.

break-even units. ________ units

break-even dollars $_________

2. what was the margin of safety in dollars for drake company last year? Round your final answer to the nearest whole dollar.

$_________

3. suppose that drake company is considering an investment in new technology that will increase fixed costs by $245,300 per year, but will lower variable costs to 46 % of sales. units sold will remain unchanged. Prepare a budgeted income statement assuming drake makes this investment. Round all amounts to the nearest dollar.

what is the new break-even point in units, assuming the investment is made? In your computations, around the unit contribution margin to the nearest cent. Round your final answer to the nearest whole unit.

_______ units

$1,444,800 996,000 $448,800 296,200 $152,600 Sales (24,000 units) Less: Variable costs Contribution margin Less: Fixed costs Operating income Drake Company Budgeted Income Statement Sales v Less: Variable costs v Contribution margin Less: Fixed costsv Net income