Bill Johnson, sales manager, and Diane Buswell, controller, at Current Designs are beginning to analyze the cost considerations for one of the composite models of the kayak division. They have provided the following production and operational costs necessary to produce one composite kayak. Kevlar $290 per kavak Resin and supplies $120 per kayak Finishing kit (seat, rudder, ropes, etc.) $150 per kayak Direct Labor $480 per kayak Selling and administrative expenses-variable $460 per kayak Selling and administrative expenses-fixed $108,000 per year Manufacturing overhead-fixed $240,000 per year

Bill and Diane have asked you to provide a cost-volume-profit analysis, to help them finalize the budget projections for the upcoming year. Bill has informed you that the selling price of the composite kayak will be $2,100.

(a)

Calculate unit variable costs.

(b) Determine the unit contribution margin.

(C)

Using the unit contribution margin, determine the break-even point in sales units for this product line.

(d)

Assume that Current Designs would like to earn net income of $225,000 on this product line. Using the unit contribution margin, calculate the number of units that need to be sold to achieve this goal.

(e)

Based on the most recent sales forecast, Current Designs expects to sell 1,000 units of this model. Calculate the margin of safety in dollars and the margin of safety ratio. (Round percentage to 2 decimal places, 25.50%.)