Question 1 Presto Company makes radios that sell for $25 each. For the coming ye

Question

Question 1 Presto Company makes radios that sell for $25 each. For the coming year, management expects fixed costs to total $312,700 and variable costs to be $10.75 per unit. Compute the break-even point in dollars using the contribution margin (CM) ratio. (Round answer to 0 decimal places, e.g. 1,225.) Break-even point $ LINK TO TEXT Compute the margin of safety ratio assuming actual sales are $842,000. (Round margin of safety ratio to 2 decimal places, e.g. 10.50.) Margin of safety % LINK TO TEXT Compute the sales dollars required to earn net income of $170,375. Required sales $

Explanation / Answer

Contribution margin (CM) ratio=(25-10.75)/25= 57% Break-even point = 312700/57%= $548596 Margin of safety ratio=(842000-548596)/842000= 34.85% Sales dollars required =(842000+170375)/57%= $1776096

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