Exercise 1 (6 Points).

The following information describes a product expected to be produced and sold by Quark Corporation: Selling price $33 per unit Variable costs $27 per unit Total fixed costs $855,000 per year Required: (a) Calculate the contribution margin per unit. (3 Points). (b) Calculate the break-even point in units. (3 Points).

Exercise 2. (7 Points).

Clockworks Co. reports the following data for the current year:

Units sold 1,200

Unit sales price $30

Unit variable cost $10

Total fixed cost $18,000

Required:

1. Calculate Clockworks' pretax income. (5 Points)

(b) Calculate Clockworks' degree of operating leverage.(2 Points).

Exercise 3 (12 Points).

Bing Company's contribution margin income statement is presented below. Sales for the current period consisted of 7,500 units.

Compute the company's break-even point in units (4 Points)

Compute the companys breakeven in dollars. (3 Points)

Compute the margin of safety in dollars (3 Points)

Compute the Companys margin of safety in percent (3 points).

Bing Company Contribution Margin Income Statement
Sales	$225,000
Variable costs	135,000
Contribution margin	90,000
Fixed costs	48,000
Net income	$42,000