The Cornish Corporation Has Budgeted Fixed Costs of $125,000 and an Estimated

question 101

Essay

The Cornish Corporation has budgeted fixed costs of $125,000 and an estimated selling price of $16.50 per unit. The contribution margin ratio is 40% and the company plans to sell 25,000 units in 2021.
Required:
(a) Compute the break-even point in dollars.
(b) Compute the margin of safety for 2021.
(c) Compute the expected operating profit for 2021.

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Definitions:

Secured Party

An individual or entity that holds an interest, typically a security interest, in another's property as collateral for a debt.

Relinquish

To voluntarily give up or surrender a claim, right, or possession.

Security Agreement

A legal document that specifies the collateral for a secured loan, establishing the lender's rights to the secured property.

Rights and Duties

The legal entitlements and obligations that are held by individuals and entities under the law.