Please do not attempt the question unless you answer it completely. This is a multi-part question.

Formula sheet provided to use to answer questions:

1a. Gossen Company is planning to sell 200,000 units for $4 per unit. The contribution margin ratio is 60%. If Gossen will break even at this level of sales, what are the fixed costs?

a. $100,000

b. $200,000

c. $300,000

d. $320,000

1b. If the selling price is $500 per unit, the variable cost per unit is $300 and the total fixed costs are $200,000, how many units will need to be sold to hit a tarhet profit of $120,000? What is the target revenue?

1c. This company also makes calculators that sell for $20 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $9 per unit. Compute the following:

a. BEP in dollars and BEP in units.

b. Margin of safety percentage assuming actual sales are $500,000

c. Sales required in dollars to earn a before tax profit of $165,000

Chapter 9 BEP and CVP Analysis: In-class Practice Sales Revenues - Variable Costs (VC) - Fixed Costs (FC)-Profits Selling price per unit * units-VC per unit * units-FC = Profits Formula BEP BEP in units = FC/CM per unit where CM per unit-Price per unit-VC per unit BEP in dollars-. FC/CM%. where CM% CM per unit/Price per unit | MS in Units =Actual sales in units-BEP units Margin of Safety (MS) MS in Dollars-Actual sales in $-BEP in sales $ MS Percentage (MS%)-MS in Units/ Actual sales in units or MS in dollars/Actual sales in dollars CVP CVP in units = (FC+PBT)/CM per unit, where PBT is a profit before tax. CVP in dollars-(FC+PBT)/CM% or-CVP in units*Selling price If the target is profit per unit before tax (PuBT), CVP in units = FC/(CM per unit-PuBT) Note: . If we know the profit after tax (PAT), we can convert it to PBT by using PBT-PAT/(1-Tax rate) Multiproduct BEP in units - FC/WACM per unit BEP BEP in dollars FC/WACM%. where WACM%= WACM per unit/WA sales price Note: for a mix/bag of x units of product A with y units of product B, WACM per unit-x*CM per unit of A + y CM per unit of B WA sales price-x*Sales price of A + y*Sales price of B DOL = Total CM / Profit before taxes Margin of Safety%-1/Degree of Operating Leverage Degree of Operating Leverage-1 Margin of Safety % Degree of OperatingM Leverage (DOL)