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Home Q & A Board Other Fields Homework Help Business Accounting
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zurainzlpt zurainzlpt
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Posts: 324
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6 years ago
Furniture, Inc., sells lamps for $30. The unit variable cost per lamp is $22. Fixed costs total $9,600.

Required:
a.What is the contribution margin per lamp?
b.What is the breakeven point in lamps?
c.How many lamps must be sold to earn a pretax income of $8,000?
d.What is the margin of safety, assuming 1,500 lamps are sold?
Textbook 
Cost Accounting: A Managerial Emphasis

Cost Accounting: A Managerial Emphasis


Edition: 16th
Authors:
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wrote...
#1
6 years ago
 a.Contribution margin per lamp = $30 - $22 = $8

b.N = Breakeven point in lamps
$30N - $22N - $9,600 = 0
$8N - $9,600 = 0
N = $9,600/$8 = 1,200 lamps

c.N = Target sales in lamps
$30N - $22N - $9,600 - $8,000 = 0
$8N - $17,600 = 0
N = $17,600/$8 = 2,200 lamps

d.Margin of safety= Sales - Breakeven sales
= ($30.00  1,500) - $36,000 = $9,000
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