Exercise 11-17 Bridgeport Co, a manufacturer of rain barrels, had the following

Question

Exercise 11-17 Bridgeport Co, a manufacturer of rain barrels, had the following data for 2016 Sales 4,200 units Sales price $60 per unit Variable costs $27 per unit Fixed costs $130,284 What is the contribution margin ratio? (Round answer to O decknal places ees27%) Contribution margin ratio ' What is the break-even point in dollars? (Round intermediate calculation and final answers to o decinmal places, e-g. s,275. what is the margin of safety in dollars and as a rato? (Round ratio to 2 decimal places e-g. 12.25) 8 2 3 4 5 6 8 9

Explanation / Answer

Contribution margin=Sales-Variable costs

=(60-27)=$33 per unit

Contribution margin ratio=Contribution margin/Sales

=(33/60)=55%

Breakeven point=Fixed cost/Contribution margin ratio

=(130284/0.55)=$236880

Margin of safety=Total sales-Breakeven sales

=(4200*60)-236880=$15120

Margin of safety ratio=MOS/Total sales

=(15120/(4200*60)

=(15120/252000)=6%

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