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Key terms: Contribution margin, Contribution margin ratio, Break-even point, Margin of safety, Operating leverage, Target Profit Chapter 6-practice problem USA Security Systems is a
Key terms: Contribution margin, Contribution margin ratio, Break-even point, Margin of safety, Operating leverage, Target Profit Chapter 6-practice problem USA Security Systems is a company that installs a standard home security system for residential customers. Each system is sold for $3,500. The cost to put together and install the system is $1,925. In addition, the sales staff receives a commission of 10% of the selling price. Fixed costs are expected to be $551,250 and the company plans to sell 720 units. 1. Prepare a contribution format income statement. 2. Compute the contribution margin ratio. 3. Determine the breakeven point in both units and sales dollars. I
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