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Taveras Industries developed the following information for the product it sells: Sales price $50 per unit Variable cost of goods sold 528 per unit Fixed
Taveras Industries developed the following information for the product it sells: Sales price $50 per unit Variable cost of goods sold 528 per unit Fixed cost of goods sold $650,000 Variable selling expense 10% of sales price Variable administrative $2.00 per unit expense Fixed selling expense $400,000 Fixed administrative $300,000 expense For the year ended December 31, 2018, 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 2018. (6 marks) (b) What was the company's break-even point in units in 2018? Use the contribution margin technique. (4 marks) (C) What was the company's margin of safety in dollars in 2018? (2 marks) Erickson, Inc makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $225,000. Variable costs are $14 per unit. Instructions (a) Compute break-even sales using the contribution margin ratio. (3 marks) (b) Compute margin of safety ratlo assuming actual sales are 5937,500.(2 marks) (c) Compute the sales required to earn net income of $150,000, using the mathematical equation. (1 mark)
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