The following data pertain to Epsom Corporation's operations:
Sales 12,000 units
Selling price $25 per unit
Contribution Margin Ratio 40%
Margin of Safety percentage 30%
1. What is the variable expense per unit?
2. What is the break-even level in sales dollars?
3. What is the net operating income at sales of 12,000 units?
1. The contribution margin ratio = 40%. This implies that the variable cost is 60%. The selling price per unit is $25. The variable cost per unit is 60%X25=$15.
2. Margin of ...
The solution explains the calculation of variable expenses, break-even and net income.