Erickson Inc. makes student book bags that sell for $20 each. For the coming year management expects fixed costs to be $225000. Variable costs are $14 per unit.
Instructions
(a) Compute break-even sales in dollars using the mathematical equation.
(b) Compute break-even sales using the contribution margin ratio.
(c) Compute margin of safety ratio assuming actual sales are $937500.
(d) Compute the sales required to earn net income of $150000 using the mathematical equation.

Question

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The Answer of Erickson Inc. makes student book bags that sell for $20 each. For the coming year management expects fixed costs to be $225000. Variable costs are $14 per unit.
Instructions
(a) Compute break-even sales in dollars using the mathematical equation.
(b) Compute break-even sales using the contribution margin ratio.
(c) Compute margin of safety ratio assuming actual sales are $937500.
(d) Compute the sales required to earn net income of $150000 using the mathematical equation.