Contribution Margin, Cost-Volume-Profit, Margin of Safety

Candyland Inc. produces a particularly rich praline fudge. Each 10-ounce box sells for $5.60. Variable unit costs are as follows:

Line Item Description	Cost
Pecans	$0.70
Sugar	0.35
Butter	1.85
Other ingredients	0.34
Box, packing material	0.76
Selling commission	0.20

Fixed overhead cost is $32,300 per year. Fixed selling and administrative costs are $12,500 per year. Candyland sold 35,000 boxes last year.

Required:

1. What is the contribution margin per unit for a box of praline fudge? fill in the blank 1 of 10$

What is the contribution margin ratio? fill in the blank 2 of 10 %

2. How many boxes must be sold to break even? fill in the blank 3 of 10 boxes

What is the break-even sales revenue? fill in the blank 4 of 10$

3. What was Candyland's operating income last year? fill in the blank 5 of 10$

4. What was the margin of safety in sales dollars? fill in the blank 6 of 10$

5. Conceptual Connection: Suppose that Candyland Inc. raises the price to $6.20 per box but anticipates a sales drop to 31,500 boxes. What will be the new break-even point in units? fill in the blank 7 of 10 units

Should Candyland raise the price? fill in the blank 8 of 10

YesNo

, operating income will fill in the blank 9 of 10

decreaseincrease

by fill in the blank 10 of 10$.