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Cost volume profit analysis Honey Bear produces a single product. The projected income statement for the coming year is as follows: Sales (40,000 units @
Cost volume profit analysis Honey Bear produces a single product. The projected income statement for the coming year is as follows: Sales (40,000 units @ $15) $ 600,000 Total variable cost $(400,000) Contribution margin $200,000 Total fixed cost $(150,000) Operating income $50,000 Required: a. Compute the break-even point in units and sales dollars (Note: round to the nearest unit and dollar). b. Compute the new operating income if sales are 20 per cent higher than expected. (Note: round to the nearest dollar). c. If the variable cost became $5 per unit, what would the new break-even amount be in units? d. Explain what is meant by a margin of safety and what would this margin be if Honey Bear sold 35,000 units per year? (Note: use your answer from Part c.) Type each answer below with its corresponding letter (a-d)
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