Glacial Company estimates that variable costs will be 62.5% of sales, and fixed costs will total $600,000. The selling price of the product is $4.
Instructions
- Prepare a CVP graph, assuming maximum sales of $3,200,000. (Note: Use $400,000 increments for sales and costs and 100,000 increments for nits.)
- Compute the break-even pount in (1) units and (2) dollars.
- Assuming actual sales are $2 million, compute the margin of safety in (1) dollars and (2) as a ratio
Solution
