Suppose Bailey Corp.'s breakeven point is revenues of 1,500,000 fixed cost are 660,000

Requirements

1. Compute the contribution margin percentage.

2. Compute the selling price if variable costs are

$1414 per unit.

3. Suppose 65,000units are sold. Compute the margin of safety in units and dollars.

4. What does this tell you about the risk of Bailey making aloss? What are the most likely reasons for this risk toincrease?

Requirement 1. Compute the contribution margin percentage.

Determine the formula for the contribution margin percentage.

contribution margin percentage = ------------------------ / ------------------------------------------