Break even units contribution margin ratio margin of safety...

Break-Even Units, Contribution Margin Ratio, Margin of Safety Khumbu Company's projected profit for the coming year is as follows: Total Per Unit Sales: $3,105,375 ($45.50) Total variable cost: $1,304,258 ($19.11) Contribution margin: $1,801,117 ($26.39) Total fixed cost: $1,447,726 Operating income: $353,391 Required: 1. Compute the break-even point in units. If required, round your answer to the nearest whole value. (units) 2. How many units must be sold to earn a profit of $240,000? If required, round your answer to the nearest whole value. (units) 3. Compute the contribution margin ratio. If required, round your answer to the nearest whole number. (%) Using the rounded ratio from above, 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. (units)

Transcript

00:01 In the given question for combo company, the first thing that we need to find out is the break -even point in units.

00:06 So the break -even point in units can be calculated with the help of formula that is fixed cost upon contribution per unit.

00:25 Now from the question, we can see that the total fixed cost was of 1 ,447 ,726.

00:38 This is the total fixed cost and the contribution per unit is 26 .39.

00:48 This is the contribution per unit.

00:50 So finally if we solve this then this is going to come 54888 .88 88 units or if we round off this to the nearest whole number then this is going to be 54859 units.

01:10 So the break -even point in units is 548 -59 units.

01:18 Now in the second question the company or the question has asked to find out the number of units to be sold to earn a profit of $240 ,000.

01:28 So the desired or we can say the acquired sales.

01:34 So the required sales in units to earn profit of 200 ,000.

01:50 $240 ,000 will be the fixed cost plus the profit that we want to earn upon contribution per unit.

02:11 So the fixed cost is of $1 ,44726 and the profit that we want to earn is of $240 ,000 upon contribution per unit and that is 26 .39 dollars so solving this we are going to get 63953 .23 units or if we round of this then this is this will be 63953 units this had been approximated to the nearest whole number so the required sales to profit of $240 ,000 will be 63 ,953 units needed to be sold to have the $240 ,000 profit.

03:09 Now in the third part, the question has asked us to compute the contribution margin ratio.

03:15 So the contribution margin ratio can be calculated with contribution per unit upon selling price per unit times 100.

03:43 Contribution per unit is of $26 .39 and the sales price is of $45 .50 times 100 is going to get us the contribution margin and that comes to 58%.

04:02 So now in the part b we need to find out the additional profit that comboed on if sales were $160 ,000 more than the expected...

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