Cost-Volume-Profit Equation, Basic Concepts, Solving for Unknowns

Legrand Company produces hand cream in plastic jars. Each jar sells for $3.40. The variable cost for each jar (materials, labor, and overhead) totals $2.55. The total fixed cost is $58,140. During the most recent year, 81,600 jars were sold.

	Required:
1.	What is the break-even point in units for Legrand? What is the margin of safety in units for the most recent year?
2.	Prepare an income statement for Legrands most recent year.
3.	How many units must be sold for Legrand to earn a profit of $25,500?
4.	What is the level of sales dollars needed for Legrand to earn operating income of 10% of sales?

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1(a) What is the break-even point in units for Legrand?

The break-even point in units is __________ .

1(b) What is the margin of safety in units for the most recent year?

The margin of safety in units is _________ .

2. Prepare an income statement for Legrands most recent year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. If there is an operating loss, enter the amount as a negative number using a minus sign.

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Legrand Company

Income Statement

For the most recent year

1
2
3
4
5

fill in the blank

3. How many units must be sold for Legrand to earn a profit of $25,500?

___________

4. What is the level of sales dollars needed for Legrand to earn operating income of 10% of sales?

__________