Company C makes calculators that sell for $20 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $9 per unit.

Calculate the break-even point in units

The break-even point = fixed costs / (sales price per unit variable costs per unit)

= 220,000/ (20-9)

= 20,000 units

Calculate the break-even point in dollars

The break- even point in dollars= fixed costs / contribution margin

Contribution margin= sales price per unit- variable costs per unit / sales price per unit

= 20- 9/ 20

= 11/20

= 0.55

The break-eve

Calculate the margin of safety, assuming actual sales of $500,000

Calculate the sales required in dollars to earn a net income of $165,000

If company C has a higher operating leverage and if sales are declining what would be the impact on the companys net income and if the sales are increasing what would be the result on the net income