Ayayai produces one single product, a small reading tablet, and sells it at $120 per unit. Its current annual sales are $192,000. Its annual fixed costs include factory rent, $38,400; depreciation expense; equipment, $7,680; utilities, $15,360; insurance, $5,760. Its variable costs include materials, $36 per unit, and direct labour, $48 per unit. Ayayais income tax rate is 20%.

What is the contribution margin per unit?

Contribution margin per unit

$

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What is the contribution margin ratio?

Contribution margin ratio

%

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How many units must Ayayai sell to break even? (Round answer to the next whole integer, e.g. 1,255.)

Sales

units

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If Ayayai would like to earn a profit after tax of $13,000, what should the sales be? At this sales level, what is the degree of operating leverage? What is the margin of safety in unit? (Round total sales and margin of safety to 0 decimal places, e.g. 5,125. Round degree of operating leverage to 2 decimal places, e.g. 15.16.)

Total Sales		$
Degree of operating leverage
Margin of safety			units

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If Ayayai would like to earn a profit after tax that is 8% of sales, what should the sales be? How many units does Ayayai need to increase from the current sales level?

Total Sales		$
Units to be increased by			units