The following information is for a product manufactured and sold by Drake Company:Sales price per unit: $100Variable cost per unit: $30Total annual fixed costs: $350,000Required:1) Calculate the contribution margin per unit.2) How many units must Drake sell to break-even?3) How many units must Drake sell to achieve a profit of $35,000?
What will be an ideal response?
1) Contribution margin per unit = $100 - $30 = $70
2) Sales in units to break-even = $350,000 ÷ $70 = 5,000 units
3) Sales in units to earn profit of $35,000 = $385,000 ÷ $70 = 5,500 units
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