00:03
The tahrir company.
00:05
This company sells product a for $70 each.
00:09
Its estimated income statement for 2017 is given to us below.
00:13
We have sales, variable cost, contribution margin, fixed cost and the pre -tax profit given to us here.
00:21
The first part of the question tells us to compute the contribution margin per unit and the number of units sold that must be able to break even.
00:32
Okay, so first part for part a, you have to find the contribution margin per unit and units sold in order to break even.
00:40
Now let's start calculating the contribution margin.
00:44
The contribution margin can be found by the selling price minus the variable price.
00:50
The selling price is given to us as $70.
00:54
However, we do not have the variable price.
00:56
So let's start computing the variable price.
00:59
The variable price would be equal.
01:01
To the number of units.
01:05
First you have to find the number of units sold.
01:08
Then you have to divide the variable cost by the number of units sold.
01:11
We are being told that there were sales of 4 .97 million and each product costs $70.
01:19
So in order to find number of units sold, we simply have to divide 4 .97 million by $70.
01:29
Doing so, i get an answer of $71 ,000.
01:32
This means 71 ,000 units were sold.
01:37
Sorry, is not only units, they're units.
01:39
71 ,000 units were sold.
01:41
Now calculating the variable cost, we'll simply have to do 2 million divided by number of units sold.
01:52
This will give us the variable price or rather the variable cost per unit to be $28 .17.
02:00
Now using that, we can calculate the contribution margin.
02:03
The contribution margin, as i mentioned earlier, is the selling price minus a variable cost per unit...