EXERCISE 16.9

Break-Even in Units

Gelbart Company manufactures gas grills. Fixed costs amount to $16,335,000 per year. Variablecosts per gas grill are $225, and the average price per gas grill is $600.

Required:

1.How many gas grills must Gelbart Company sell to break even? gas grills

2.If Gelbart Company sells 46,775 gas grills in a year, what is the operating income? $

3.If Gelbart Companys variable costs increase to $240 per grill while the price and fixed costs remain unchanged, what is the new break-even point? gas grills

Exercise 16.8 Contribution Margin, Break-Even Units, Contribution Margin Income Statement, Margin of Safety

Zebra Company manufactures custom-designed skins (covers) for iPods and other portable MP3devices. Variable costs are $10.80 per custom skin, the price is $16, and fixed costs are $66,560.

Required:

1.What is the contribution margin for one custom skin? Round your answer to the nearest cent. $per custom skin

2.How many custom skins must Zebra Company sell to break even? custom skins

3.If Zebra Company sells 13,000 custom skins, what is the operating income? $

4.Calculate the margin of safety in units and in sales revenue if 13,000 custom skins are sold.

Margin of safety in units	units
Margin of safety in sales revenue	$