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WATER WAY ANSERS B

# WATER WAY ANSERS B - (A).Duringtheyear,thecompany...

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(1) What is the product’s contribution margin ratio? 2937120-2053200/2937120 = .3 or 30% (2) What is the company’s break-even point in units and in dollars for this product?  (3) What is the margin of safety, both in dollars and as a ratio?  (4) If management wanted to increase its income from this product by 10%, how many additional u (A) Waterways markets a simple water control and timer that it mass-produces. During the year, the sold 696,000 units at an average selling price of \$4.22 per unit. The variable expenses were \$2,053 the fixed expenses were \$683,338.  683338/.3 = \$2277793 2277793/4.22 = 539761 units 2937120-2277793 = \$659327 659327/2937120  = .2245 or 22.45% Present income 2937120 x .3 =881136-683338= 197798 Targeted income  =  197798 x  1.1 = 217578 Sales should be = 683338+217578.3 = \$3003052 Sales in units = 3003052/4.22 = 711624 – 696000 = 15624 additional unit

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71090 x 4.22 = 300000 x .3 =\$90000 additional net income units would have to be sold to reach this income level?
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