Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

Exercise 28

BREAK-EVEN UNITS AND SALES REVENUE, MARGIN OF SAFETY
Dunst and Dafoe Copy Shop (D D) provides photocopying service. Next year, D D estimates it will copy 2,400,000 pages at a price of $0.08 each in the coming year. Product costs include:

There is no variable selling expense; fixed selling and administrative expense totals $21,500.
Required:
1. Calculate the break-even point in units.
2. Calculate the break-even point in sales revenue.
3. Calculate the margin of safety in units for the coming year.
4. Calculate the margin of safety in sales revenue for the coming year.
5. What if the total fixed overhead increases to $53,300? Recalculate:
a. Break-even point in units
b. Break-even point in sales revenue
c. Margin of safety in units for the coming year
d. Margin of safety in sales revenue for the coming year