(2) Break- even sales
Solution
Sale price per unit = 20 per unit
Variable cost per unit = 20*63% = 12.60 per unit
Contribution margin per unit = 20*37% = 7.40 per unit
a) Break even point = 2516000/7.4 = 340000 units
Break even sales = 340000*20 = 6800000
b) Margin of safety = 8000000-6800000 = 1200000
Margin of safety ratio = 1200000*100/8000000 = 15%