Pharoah manufactures and sells swimsuits for $40.00 each. The estimated income statement for 2017 is as follows:

Sales			$2,000,000
Variable costs			860,000
	Contribution margin		1,140,000
Fixed costs			880,000
	Pretax earnings		$260,000

Compute the contribution margin per swimsuit and the number of swimsuits that must be sold to break even. (Round contribution margin per swimsuit to 2 decimal places, e.g. 15.25 and break even swimsuits to 0 decimal places, e.g. 125.)

Contribution margin		$	per swimsuit
Break even			swimsuits

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What is the margin of safety in the number of swimsuits?

Margin of safety

swimsuits

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Compute the contribution margin ratio and the breakeven point in revenues. (Round contribution margin ratio to 3 decimal places, e.g. 0.256 and breakeven point to 0 decimal places, e.g. 125.)

Contribution margin ratio
Breakeven point		$

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What is the margin of safety in revenues? (Round answer to 0 decimal places, e.g. 125.)

Margin of safety

$

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Suppose next years revenue estimate is $190,000 higher. What would be the estimated pretax earnings?

Estimated pretax earnings

$

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Assume a tax rate of 30%. How many swimsuits must be sold to earn after-tax earnings of $200,000? (Round answer to 0 decimal places, e.g. 125.)

Pretax profit

swimsuits