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e sells one style of baseball hat. He buys the hats from a supplier for $36 and sells them for $42. Adam’s cur
Expert Answer
1.
contribution margin per unit=Selling price-Variable cost
=$42-$36
=$6
2.
current level of fixed costs=current breakeven point*contribution margin per unit
=33,600*$6
=$201,600
3.
Sales to be made=Fixed costs+[Net income/(1-tax rate)]/Contribution margin per unit
=$201,600+[$47040*(1-0.3)]/$6
=44,800 hats
4
margin of safety=Actual sales-Break even sales
=44,800-33,600
=11,200 hats
5
Sales to be made=Fixed costs+[Net income/(1-tax rate)]/Contribution margin per unit
=$201,600+[$84672*(1-0.3)]/$6
=53,760 hats
6.
break even sales=Fixed cost/Contribution margin per unit
=$201,600/($42-$37)
=40,320 hats
7.
