Goodman Company has sales of 3,000 units at $80 per unit.

Question

Quizplus · Accepted Answer

The total revenue is calculated by multiplying the number of units sold by the price per unit:
3,000 units x $80/unit = $240,000
To find the contribution margin, subtract the variable cost per unit from the selling price:
$80/unit - $40/unit = $40/unit
To find the contribution margin ratio, divide the contribution margin by the selling price:
$40/unit ÷ $80/unit = 0.5 or 50%
To find the break-even point in units, divide the fixed costs by the contribution margin per unit:
Break-even point = $120,000 ÷ $40/unit = 3,000 units
To find the margin of safety, subtract the break-even point from the actual units sold and divide by the actual units sold:
Margin of safety = (3,000 units - 3,000 units) ÷ 3,000 units = 0 or 0%
To find the operating leverage, divide the contribution margin by the operating income:
Operating leverage = $120,000 ÷ $69,420 = 1.73.

Goodman Company Has Sales of 3,000 Units at $80 Per