Townsville Ltd estimates that variable costs will be 60% of sales and fixed costs will total $1,600,000. The selling price of the product is $10, and 500,000 units will be sold.
Instructions
: Using the mathematical equation:
(a) Compute the break-even point in units and dollars.
(b) Compute the margin of safety in dollars and as a ratio.
(c) Compute profit.

Question

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The Answer of Townsville Ltd estimates that variable costs will be 60% of sales and fixed costs will total $1,600,000. The selling price of the product is $10, and 500,000 units will be sold.
Instructions
: Using the mathematical equation:
(a) Compute the break-even point in units and dollars.
(b) Compute the margin of safety in dollars and as a ratio.
(c) Compute profit.

Townsville Ltd Estimates That Variable Costs Will Be 60% of Sales