Contribution margin ratio and break-even point
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The following information describes a product expected to be produced and sold by Hadley Company:
Selling price $80 per unit
Variable costs $32 per unit
Total fixed costs $630,000
Required:
(a) Calculate the contribution margin ratio.
(b) Calculate the break-even point in dollar sales.
(c) What dollar amount of sales would be necessary to achieve a pretax income of $120,000?
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Solution Summary
The solution explains how to calculate the contribution margin ratio and break-even point in dollar sales
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Required:
(a) Calculate the contribution margin ratio.
Contribution margin ratio = Contribution margin/Sales
Contribution margin = Selling price - ...
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