CostVolumeProfit Equation, Basic Concepts, Solving for Unknowns (LO 1,2,3 and 5)

Goldilocks Company produces high-end combination shampoos and conditioners in individual-use bottles for hotels. Each bottle sells for $0.90.

The variable costs for each bottle (materials, labour, and overhead) total $0.63. The total fixed costs are $210,600. During the most recent year 830,000 bottles were sold.

Required:

1. What is the BEP in units for Goldilocks? What is the margin of safety in units for the recent year?

2. Prepare an income statement for Goldilocks's most recent year.

3. How many units must be sold for Goldilocks to earn a profit of $40,500?

4. Using the contribution margin percentage approach, what is the level of sales dollars needed for Goldilocks to earn operating income of 20 percent of sales?