Zebra Company manufactures custom-designed skins (covers) for - 15964

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Exercise 16.8
Contribution Margin, Break-Even Units, Contribution Margin Income Statement, Margin of Safety

Zebra Company manufactures custom-designed skins (covers) for iPods® and other portable MP3 devices. Variable costs are $10.80 per custom skin, the price is $16, and fixed costs are $66,560.

Required:

1. What is the contribution margin for one custom skin? Round your answer to two decimal places.

2. How many custom skins must Zebra Company sell to break even?

3. If Zebra Company sells 13,000 custom skins, what is the operating income?

4. Calculate the margin of safety in units and in sales revenue if 13,000 custom skins are sold.

Margin of safety in units

Margin of safety in sales revenue

 

 

Solution Description

 

1. What is the contribution margin for one custom skin? Round your answer to two decimal places.
$5.2

2.

Attachments
Exercise 16.8.docx
Exercise 16.8.d...