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# Variable expense/Break-Even/Net Income

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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?

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#### Solution Preview

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 ...

#### Solution Summary

The solution explains the calculation of variable expenses, break-even and net income.

\$2.49