Texan Co. plans to produce and sell adjustable beds.
The projected data for producing an adjustable bed are as follows:
Budgeted sales per year (in units)	4,000
Selling price	$700
Variable costs	$560
Total fixd costs	$420,000
Income tax rate	20%
Desired annual before tax profit	$140,000
Required:
a) What is the contribution margin for each adjustable bed?
b) How many adjustable bed would it have to sell in order to break even?
c) How many sales revenue would it have in order to break even?
d) To earn deired after-tax profit, how many adjustable bed would it have to sell?
e) Calculate margin of safety in units with the budgeted sales volume.
f) Calculate degree of operating leverage with budgeted sales volume.