X Cut Calibri 11 ad Le Copy 111 111 Paste BI U N ** Format Painter A . w Clipboard IN Font US H64 8 X fi A B DE F G H I K Break-Even Point and Target Profit Measured in Units (Single Product). Nellie Company has monthly fixed costs totaling $100,000 and variable costs of $20 per unit. Each unit of product is sold for $25. 2 3 Required: 4 1 Calculate the contribution margin per unit 2 Find the break-even point in units 5 3 How many units must be sold to earn a monthly profit of $40,000? 77 4 Calculate the contribution margin ratio 3 5 Find the break-even point in sales dollars 2 6 What amount of sales dollars is required to earn a monthly profit of $60,000? 0 1 Assume Nellie Company expects to sell 24,000 units of product this coming month. 2. 7 Find the margin of safety in units 3 8 Find the margin of safety in sales dollars 4 15 Hint: this follows the "Lecture file" pretty closely (look at that for help with formulas, if needed 16 17 1 Contribution Margin Per unit Note: Only the "final answer" on this sheet v 18 Sales 25.00 19 Less Variable 20.00 20 Contribution Margin Per unit 5.00 21 22 2 BE Units Example 23 Profit (( s V Q F 20,000 25 26 27 20,000 28 3 Profit Units Example 30 Profit (( s V) 31 24 X 29 32 II 1 1 1 33 X 6.27 28 29 6.30 31 6.33 6.85 6.36 37 6.57 Extra Cred G F J K C D B 3 Profit Units Example (( S v) F Profit = X Q) LE X X x 28,000 = 4 CM Ratio Sales Less Variable CM 5 BE Dollars Example CM Ratio x S Profit F x X W S am F CM Ratio s 2 s 3 4 55 6 Profit Dollars Example CM Ratio X S Profit 11 F 56 57 X S 58 59 60 61 62 63 P+F CM Ratio S FA 6.27 28 29 6.30 31 6.33 6.35 6.36 37 6.57 Ready Accessibility: Investigate fx B D F H = un P+F CM Ratio S = 7 Margin of Safety Units Margin of Safety in units =Total Sales (or Projected Sales) - Breakeven Sales MOS S BES MOS 24,000 20,000 MOS 4,000 Margin of Safety Dollars Margin of Safety in Dollars = Total Sales (or Projected Sales) - Breakeven Sales MOS$ BES MOS$ 600,000 500,000 MOS$ 100,000 11