Best Harmonica Company manufactures and sells harmonicas to distributors. The model they produce sells to the distributors for $8.00 each. Following are cost estimates:
Sales	$3,480,000
Direct materials	543,750
Direct labor	761,250
Manufacturing overheadvariable	152,250
Manufacturing overheadfixed	640,000
Selling expensesvariable	78,300
Selling expensesfixed	300,000
Administrative expensesvariable	47,850
Administrative expensesfixed	185,000
Instructions
A. Prepare a CVP income statement based on these cost estimates.
B. Commute contribution margin ratio.
C. Compute the break-even point in (1) units and (2) dollars.
D. Compute the margin of safety ratio.
E. Determine the sales dollars required to earn net income of $1,000,000.