CVP - Review A certain company sells its only product for $12 per unit. The variable costs to produce the product are $7 per unit and it costs approximately $1 per unit for selling and administrative costs. The fixed costs of production are $400,000 and the fixed selling and administrative costs are $200,000. The company is subject to a 30% tax rate. ro ooo What is the contribution margin? What is the contribution margin ratio? What is the breakeven point in units? What is the breakeven point in dollars? How many units must be sold to earn a profit of $70,000 before taxes? The lease payment on the manufacturing facilities will increase $500 per month or $6,000 annually. Calculate the new breakeven in units assuming selling price and variable costs do not change. The company plans to start paying a sales commission which will increase variable costs by 2.5% of sales in the coming year. ab .. h. Calculate the new variable cost per unit. Calculate the new contribution margin. Assuming the increase in the lease payment, how many units must be sold to breakeven. How many units must be sold to earn a profit of $70,000 before taxes? j. Using breakeven found in item (i) above and assuming forecasted sales of 200,000 units, calculate the following: Margin of safety Margin of safety percentage