Mabo Company makes calculators that sell for $20 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $9 per unit.

(a)Compute break-even point in units using the mathematical equation.

(b)Compute break-even point in dollars using the contribution margin (CM) ratio.

(c)Compute the margin of safety percentage assuming actual sales are $500,000.

(d)Compute the sales required in dollars to earn net income of $165,000.

Know the formulas.

Recognize that variable costs change with sales volume; fixed costs do not.

Avoid computational errors.