Julie's Jewels sells cubic zirconium (fake diamond)rings for $80 each. The projected income statement for 2006 follows:
Sales $4,000,000
Variable costs (2,200,000)
Contribution Margin 1,800,000
Fixed costs (1,600,000)
Pre-tax profit $ 200,000
a)Compute the contribution margin per ring and the number of rings that must be sold to break even.
b)Compute the contribution margin ratio and the breakeven point in total revenue.
c)Suppose the total revenues were $200,000 greater than expected. What is the total pre-tax profit?
d)What is the margin of safety in number of rings?
e)Assume a tax rate of 25%. How many rings must be sold to earn an after-tax profit of $300,000?

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The Answer of Julie's Jewels sells cubic zirconium (fake diamond)rings for $80 each. The projected income statement for 2006 follows:
Sales $4,000,000
Variable costs (2,200,000)
Contribution Margin 1,800,000
Fixed costs (1,600,000)
Pre-tax profit $ 200,000
a)Compute the contribution margin per ring and the number of rings that must be sold to break even.
b)Compute the contribution margin ratio and the breakeven point in total revenue.
c)Suppose the total revenues were $200,000 greater than expected. What is the total pre-tax profit?
d)What is the margin of safety in number of rings?
e)Assume a tax rate of 25%. How many rings must be sold to earn an after-tax profit of $300,000?

Julie's Jewels Sells Cubic Zirconium (Fake Diamond)rings for $80 Each