The Peace Company has the following functional income statement for the prior month.

Sales ($50 * 100,000 units)

Cost of goods sold


Direct materials


Direct labor


Variable factory


Fixed factory



Gross profit


Selling and administrative expense



Operating income

There were no beginning and ending inventories.


a. Calculate the contribution margin per unit.

b. Calculate the contribution margin ratio.

c. What is the break-even point in units?

d. What is the amount of sales in dollars needed to obtain a before-tax profit of $40,000?