JBeats produce and sell a product that has variable costs of $33 and a selling price...

3.8 Ratings (731 Votes)

A
Current break-even point in units.	1200

B
Margin of safety in dollars.	122400

C
Net income	63000

D
Break-even point in units , accept the proposal	1217	(rounded off)

E
Net income	79970

Workings:
A
Total fixed costs	42000	=25000+17000
Divide by Unit Contribution margin	35	=68-33
Current break-even point in units	1200

B
Current sales total	204000
Less: Break even sales	81600	=1200*68
Margin of safety in dollars.	122400

C
Sales	204000
Less: Variable expenses	99000	=(204000/68)*33
Contribution margin	105000
Less: Fixed expenses	42000
Net income	63000

D
Selling price	71.4	=68*1.05
Fixed manufacturing costs	26250	=25000*1.05

Total fixed costs	46750	=26250+17000+3500
Divide by Unit Contribution margin	38.4	=71.4-33
Breakeven point in units , accept the proposal	1217

E
Sales	235620	=3300*71.4
Less: Variable expenses	108900	=3300*33
Contribution margin	126720
Less: Fixed expenses	46750
Net income	79970

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