Question 1

Big Beef BBQ Ltd sells a single product, a gas barbecue. The barbecue sells for $960 per unit. Annual fixed costs are $1 536 000, and the contribution margin rate is 40%.

Required:

1. What are the variable costs per unit?

2. How many units must the company sell to break even?

3. What is the break-even point in sales dollars?

4. If the company wants to earn a before-tax profit of $768 000, how many units must be sold? What sales dollar level is required? What is the companys margin of safety at this sales level?

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