Answer:
<u>Part A:</u>
a. Contribution margin = $140.
b. Break-even point in units = 40 units
c. Break-even point in sales dollars = $14,000
<u>Part B:</u>
a. Sales volume in units = 75 units
b. Sales volume in dollars = $26,250
Explanation:
<u>For Part A</u>
<u>Part a. Determine the amount of the contribution margin per unit.</u>
Contribution margin is the difference of "Sales - Variable cost"
Contribution margin = $350 - $210
Contribution margin = $140.(answer)
<u>Part b. Calculate the break-even point in units.</u>
Breakeven point in units = Fixed cost / Contribution margin per unit
= $5,600 / $140
= 40 units (answer)
<u>Part c. Calculate the break-even point in sales dollars.</u>
Breakeven point in sales dollars = 40 units * $350 = $14,000 (answer)
<u>Part B: Assume Mr. Jamail desires to earn a profit of $4,900 per show</u>
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<u>Part a. Determine the sales volume in units (sets of cookware) necessary to earn the desired profit.</u>
Sales volume in units = (Desired profit + Fixed costs) / Contribution margin per unit
= ($4,900 + $5,600) / $140
= 75 units (answer)
<u>Part b. Determine the sales volume in dollars necessary to earn the desired profit.</u>
Sales volume in dollars = 75 units * $350 = $26,250 (answer)