Sunshine Ltd plans to sell 30,000 webcams $120 each in the coming year. The production costs include:

Direct material per unit $50

Direct labour per unit $10

Variable overhead per unit $5

Fixed overhead $450,000

Variable selling expense per unit is $8 and the total fixed selling and administrative expense is $255,000.

Required:

1. Calculate the unit contribution margin.
2. Calculate the contribution margin ratio.
3. Calculate the break-even point in unit.
4. Calculate the margin of safety in unit. If Sunshine Ltd wishes to earn a profit of $564,000 in the coming year, calculate the sales revenue that the company must make to earn the target profit.
5. Explain why unit contribution margin becomes profit per unit above the break-even point.