Donaldson Company
Data Inputs:
Unit sales	40,000
Selling price per unit	$                       12.50
Variable expense per unit	$                          7.50
Total fixed expenses	$                 180,000
Contribution Format Income Statement						Margin of Safety
	Total	Per Unit	%			Actual sales (a)	$           500,000
Sales	$                 500,000	$                               12.50	100%			Break-even sales (b)	$           450,000
Variable expenses	300,000	7.50	60%			Margin of safety in dollars (a) - (b)	$              50,000
Contribution margin	200,000	$                                  5.00	40%			Margin of safety percentage	10.00%
Fixed expenses	180,000
Net operating income	$                    20,000
Net profit margin percentage	4.00%
CVP Graph Information
Selling price per unit	$                       12.50
Variable expense per unit	$                          7.50
Total fixed expenses	$                 180,000
CVP Graph Table	Units	Variable Expenses	Fixed Expenses	Total Expenses	Sales dollars
	-
	5,000
	10,000
	15,000
	20,000
	25,000
	30,000
	35,000
	40,000
	45,000
	50,000
CVP Graph

 

1. Using Goal Seek:

a. Calculate the unit sales required to break even.

b. Calculate the unit sales required to attain a target profit of $25,000. What would be the company's margin of safety (in dollars) at this level of sales?

c. Calculate the selling price per unit required to attain net operating income of $30,000.

d. Calculate the variable expense per unit required to attain net operating income of $30,000.

e. Calculate the unit sales required to attain a margin of safety of $75,000.

2. Using Solver:

a. Calculate the unit sales required to attain a margin of safety percentage of 15%.

b. Restore the original values in your Excel file. Calculate the unit sales required to attain a profit margin of 8%.

c. Restore the original values in your Excel file. Calculate the selling price per unit required to attain a profit margin of 10%.

d. Restore the original values in your Excel file. Calculate the variable expense per unit required to attain a profit margin of 6%.

Data Inputs: Unit sales 40,000 Selling price per unit $ 12.50 Variable expense per unit $ 7.50 Total fixed expenses $ 180,000 Donaldson Company Contribution Format Income Statement Margin of Safety Total Per Unit % Actual sales (a) $ 500,000 Sales $ Variable expenses 500,000 $ 300,000 12.50 7.50 100% Break-even sales (b) $ 450,000 Contribution margin 200,000 $ 5.00 60% 40% Margin of safety in dollars (a) - (b) $ 50,000 Margin of safety percentage 10.00% Fixed expenses 180,000 Net operating income $ 20,000 Net profit margin percentage 4.00% CVP Graph Information Selling price per unit $ 12.50 Variable expense per unit $ 7.50 Total fixed expenses $ 180,000 CVP Graph Table Units Variable Expenses Fixed Expenses Total Expenses Sales dollars CVP Graph 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000