Sales price $50 per unit

Variable cost of goods sold $28 per unit

Fixed cost of goods sold $650,000

Variable selling expense 10% of sales price

Variable administrative expense $2.00 per unit

Fixed selling expense $400,000

Fixed administrative expense $300,000

For the year ended December 31, 2016, Taveras produced and sold 100,000 units of product.

Instructions:

(a) Prepare a CVP income statement using the contribution margin format for Taveras Industries for 2016.

(b) What was the company's break-even point in units in 2016? Use the contribution margin technique.

(c) What was the company's margin of safety in dollars in 2016?

Duration for solving (a), (b) and (c): (12 - 15 min.)