Contribution Margin and Break-even Point
Question 1:
Given the following information: determine;
|
Selling Price |
$17 |
|
Fixed Expenses |
|
|
Selling & Administrative |
$130,000 |
|
Interest Expense |
$10,000 |
|
Variable Expenses |
|
|
Cost of goods Sold |
$4 |
|
Selling and Administrative |
$3 |
- What is the company’s contribution margin?
- What is the break-even points in units?
- If the company wants to earn a profit of $42,000 instead of breaking even, what is the number of units the company must sell?
- Why is it important to understand the importance of break-even analysis in a business?
