Using Cost-Volume-Profit Formulas Gary Corporation Manufactures a Single Product. the Selling Price Is

question 67

Essay

Using cost-volume-profit formulas
Gary Corporation manufactures a single product. The selling price is $104 per unit, and variable costs amount to $78 per unit. The fixed costs are $36,000 per month.
(a) What is the contribution margin per unit? $________________ per unit
(b) What is the contribution margin ratio? ________________%
(c) What is the monthly sales volume (in dollars) at the break-even point? $_________________
(d) How many units must be sold each month to earn a monthly operating income of $32,000? _______________ units
(e) What is the monthly margin of safety (in dollars) if 3,000 units are sold each month? $________________
(f) What will be the monthly operating income if 3,000 units are sold each month? $________________

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Definitions:

Slightly Inelastic

A situation where a change in price leads to a relatively smaller change in the quantity demanded or supplied.

Demand for Product

The total amount of a product or service that consumers are willing and able to purchase at various price levels, at a given time.

Advertisers

companies or individuals who pay to promote their products or services, typically through various media channels.

Taxes

Compulsory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.