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Sagot :
Solution :
a). At the break even units, the total contribution margin = fixed expenses
We know that : (Selling price - variable cost) x units sold = fixed expenses
i.e. (20-14)x = 225,000
6x = 225,000
x = 37,500
Therefore, the number of units sold, x = 37,500
So, the break even analysis = 37,500 x 20
= 750,000
b). [tex]$\text{Contribution margin ratio} = \frac{\text{(Sales - variable cost) }}{\text{sales}}$[/tex]
[tex]$=\frac{20-14}{20}$[/tex]
= 30%
The Breakeven sales = [tex]$\frac{\text{fixed cost}}{\text{Contribution margin ratio}}$[/tex]
[tex]$=\frac{225,000}{30\%}$[/tex]
= 750,000
c). [tex]$\text{Margin of Safety ratio } = \frac{\text{(Sales - Breakeven sales) }}{\text{sales}}$[/tex]
[tex]$=\frac{1,2000,000-750,000}{1,200,000}$[/tex]
= 37.5%
d). Units needed :
[tex]$(20-14)x - 225,000 = 150,000$[/tex]
[tex]$6x - 225,000 = 150,000$[/tex]
[tex]$6x = 375000$[/tex]
[tex]x=62,500[/tex] units
Therefore, the sales required = 62,500 x 20
= 125,000
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