(TCO 4) Legal Docs Inc is a legal services firm that files incorporation papers for small businesses. They charge $1,000 per application. This year’s income statement shows the following:
|
Sales |
$1,295,000 |
|
Variable Expenses |
$1,023,000 |
|
Contribution margin |
$272,000 |
|
Fixed costs |
$250,000 |
|
Profit |
$22,000 |
Required:
(a) Compute the break-even point in units.
(b) Compute the contribution margin ratio.
(c) Compute the current margin of safety.
(d) How many applications must the company sell to make a profit of $350,000?