Question
Break-Even Units and Sales Revenue: Margin of Safety Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 3,080,000 pages at a
Break-Even Units and Sales Revenue: Margin of Safety
Dupli-Pro Copy Shop provides photocopying service. Next year, Dupli-Pro estimates it will copy 3,080,000 pages at a price of $0.08 each in the coming year. Product costs include:
Direct materials$0.012Direct labor$0.004Variable overhead$0.002Total fixed overhead$125,500
There is no variable selling expense; fixed selling and administrative expenses total $45,000.
Required:
In your computations that involve the contribution margin ratio, do not round the ratio.
1.Calculate the break-even point in units.
units
2.Calculate the break-even point in sales revenue.
$
3.Calculate the margin of safety in units for the coming year.
units
4.Calculate the margin of safety in sales revenue for the coming year.
$
5.What if the total selling and administrative expenses are reduced to $25,780? Recalculate the following:
a.Break-even point in unitsunits
b.Break-even point in sales revenue$
c.Margin of safety in units for the coming yearunits
d.Margin of safety in sales revenue for the coming year$
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