Seamless Gutter Sells 10 Metre Sections of Eaves Trough for $12.The

question 160

Essay

Seamless Gutter sells 10 metre sections of eaves trough for $12.The unit variable costs per section are $8.80.Fixed costs total $4,800.Required:
a.What is the contribution margin per section?
b.What is the break-even point in sections? ...in dollars?
c.How many sections must be sold to earn a pre-tax income of $4,000?
d.What is the margin of safety assuming 1,800 sections are sold?

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Definitions:

Basis of Property

The basis of property is the starting point for determining the gain or loss on the sale, exchange, or other disposition of property, generally its cost plus improvements and minus depreciation.

Recognized Gain

The portion of profit from the sale of an asset that must be reported for taxation purposes.

Shareholder

An individual or institution that owns a share of a company's stock, making them a partial owner of the company.

Net Capital Loss

Occurs when total capital losses exceed total capital gains in a tax year, with limitations on its deduction against other types of income.