Taveras Industries Developed the Following Information for the Product It

Essay

Taveras Industries developed the following information for the product it sells: $\begin{array}{ll}\text { Sales price } & \$ 50 \text { per unit } \\\text { Variable cost of goods sold } & \$ 28 \text { per unit } \\\text { Fixed cost of goods sold } & \$ 650,000 \\\text { Variable selling expense } & 10 \% \text { of sales price } \\\text { Variable administrative expense } & \$ 2.00 \text { per unit } \\\text { Fixed selling expense } & \$ 400,000 \\\text { Fixed administrative expense } & \$ 300,000\end{array}$ For the year ended December 31 2016 Taveras produced and sold 100000 units of product.
Instructions
(a) Prepare a CVP income statement using the contribution margin format for Taveras Industries for 2016.
(b) What was the company's break-even point in units in 2016? Use the contribution margin technique.
(c) What was the company's margin of safety in dollars in 2016?