Question # 5

Income Statement

Amount

Sales 11,041,560
Cost of sales
- (total manufacturing cost per
unit * no of units) 6,134,200

Gross Profit 4,907,360

Operating expenses 747,000

Net Income 4,160,360
Question # 6
Income Statement
No of Units
Units sold 1200 1800 2500

Sales 7,361,040 11,041,560 15,335,500

Cost of sales 4,089,467 6,134,200 8,519,722
Gross Profit 3,271,573 4,907,360 6,815,778

Operating expenses 747,000 747,000 747,000

Net Income 2,524,573 4,160,360 6,068,778

Calculation of break-even point in units:

Fixed cost 897,000
Variable cost per unit 3,113
Sale price per unit 6,134

Contribution margin per unit 3,021

Break-even point in units (Fixed cost / contribution margin) 296.95

Calculation of break-even point in dollars:

Contribution margin ratio 0.49
Fixed Cost 897,000

Break-even point in dollars 1,821,523.56

Calculation of units and sale for profit $ 5,000,000/-

Total fixed cost 530,000
Contribution margin per unit 2,726
Profit 5,000,000

Number of units ( (Fixed cost + Profit)/ Contribution Margin ) 2,028

Sale Revenue 12,442,500

Calculation of Margin of Safety in dollars for 1,800 units.

Total Sales 11,041,560
Break-even Sales 1,821,524
Margin of Safety 9,220,036