Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 44

Break-Even Units, Contribution Margin Ratio, Margin of Safety
Khumbu Company's projected profit for the coming year is as follows:

Required:
1. Compute the break-even point in units.
2. How many units must be sold to earn a profit of $240,000?
3. Compute the contribution margin ratio. Using that ratio, compute the additional profit that Khumbu would earn if sales were $160,000 more than expected.
4. For the projected level of sales, compute the margin of safety in units.