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  3. 1 territory ltd sells a single product an electric drill...

Question: 1 territory ltd sells a single product an electric drill...

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1. Territory Ltd sells a single product, an electric drill. The drill sells for $160 per unit. Annual fixed costs are $618,000, and the contribution margin rate is 40%

a) What are the variable costs per unit?

b) How many units must the company sell to break even?

c) What is the break-even point in sales dollars?

d) If the company wants to earn a before-tax profit of 115,000, how many units must be sold? What sales dollar level is required? What is the company’s safety margin at this sales level?

e) If the company wants to earn a before-tax profit of 20% of sales, how many units must be sold?

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