The President of Sanitex has come to you seeking advice regarding cost volume profit analysis. To be more specific, he wants to know the breakeven point in units for the mask division. He has provided you with the following table regarding the three masks that they sell:

	X1 Basic Model	X2 Better Model	X3 Best Model
Estimated Monthly Demand	50,000 units	75,000 units	150,000 units
Unit Selling Price	$5.75	$8.20	$10.25
Unit Manufacturing Costs:
Wovex - Direct Material	$2.00	$3.60	$4.80
Direct Labor	$0.75	$0.90	$1.05
Variable MOH	$1.50	$1.80	$2.10
Total Variable Unit Cost	$4.25	$6.30	$7.95

The fixed costs per month of operation are:

Manufacturing fixed costs $300,000

Selling and administration fixed costs $50,000

The president has also indicated that for every 11 masks sold, 2 are X1 masks, 3 are X2 masks, and 6 are X3 masks.

Note to students: Answer this question in the Excel worksheet template under the tab Question 4 provided by your instructor.

Required:

Part 1:

Calculate how many units of X1, X2 and X3 will be sold at the breakeven point. Note: To answer this question, you can assume that Wovex is no longer in short supply.

Part 2:

What is the margin of safety for each model of mask?