In the month of June, Bed-ford Company sold 350 widgets. The average sales price was $34. During the month, fixed costs were $6,320 and variable costs were 40% of sales.
Instructions
a. Determine the contribution margin in dollars, per unit, and as a ratio.
b. Compute the break-even point in units and dollars.
c. How much can sales decline before Bed-ford Company experiences a loss? (hint: compute margin of safety)
d. What would be the sales dollars and number of units sold if Bed-ford Company wishes to have a target profit of $4,000.
