The following information relates to Product Alpha.

Selling price per unit $100

Variable cost per unit $56

Fixed Costs $220,000

Budgeted sales are 7,500 units

Required:

a. As the Cost Accountant, management has asked you to calculate the following:

i. Contribution to sales ratio.

ii. Breakeven point in terms of units sold.

iii. Breakeven point in terms of sales revenue.

iv. Margin of safety (expressed as a percentage of budgeted sales).

b. Explain the significance of each calculation to management.