# Answered Essay: Legrand Company produces hand cream in plastic jars. Each jar sells for \$3.40. The variable cost for each jar (material

Legrand Company produces hand cream in plastic jars. Each jar sells for \$3.40. The variable cost for each jar (materials. labor, and overhead) total \$2.55. Total fixed cost is \$58,140. During the most recent years, 81,600 jars were sold.

1. What is the break-even point in units for Legrand? What is the margin of safety in units for the most recent year?
2. Prepare an income statement for Legarnd’s most recent year.
3. How many units must be sold for Legrand to earn a profit of \$25,500?
4. What is the level of sales dollars needed for Legrand to earn operating income of 10% of sales?

 1 Break even point = Fixed costs/Unit contribution margin = 58140/(3.4-2.55)= 68400 Margin of safety = 81600-68400= 13200 2 Sales 277440 Less: Variable costs 208080 Contribution margin 69360 Less: Fixed costs 58140 Net operating income 11220 3 Unit sales =(58140+25500)/(3.4-2.55)= 98400 4 Let sales dollars be \$x 0.1x = (x-0.75x)-58140 0.1x = 0.25x-58140 x = 58140/0.15= 387600 Sales dollars = \$387600
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