Glacial Company estimates that varibale costs will be 62.5% of sales and fixed costs will total $600,000. The selling price of the product is $4.00.

Instructions:

1. Prepare a CVP graph , assuming maxium sales 3,200,000. (Note: Use $400,000 increments for sales and costs and 100,000 increments for units.)

2. Compute the break-even point in (1) units and (2) dollars.

3. Assuming actual sales are $2 million, compute the margin of safety in (1) dollars and (2) as a ratio.