Final answer:
To calculate the contribution margin per unit, subtract the variable cost per unit from the sales price per unit. The break-even point can be determined by dividing the total fixed costs by the contribution margin per unit. To determine the sales level needed to earn a profit, divide the total fixed costs plus the desired profit by the contribution margin per unit.
Step-by-step explanation:
To calculate the total revenue, multiply the price per unit by the number of units sold. For example, if Ender Company sells 100 units, the total revenue would be $16,400. To calculate the contribution margin per unit, subtract the variable cost per unit from the sales price per unit. In this case, the contribution margin per unit is $72. The break-even point can be determined by dividing the total fixed costs by the contribution margin per unit. In this case, Ender Company would need to sell 10,000 units to break even. To determine the sales level needed to earn a profit of $273,600, divide the total fixed costs plus the desired profit by the contribution margin per unit. In this case, Ender Company would need to sell 17,000 units. The margin of safety can be calculated by subtracting the break-even point from the actual sales level. In this case, the margin of safety in units is 5,000 units. The margin of safety in sales dollars is $820,000. The margin of safety as a percentage is 23.81%.