Margin safety ratio, Cost Accounting

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Small Steps sells step stools. Their budget information is shown below.

selling price: $40 per stool
Variable expense:$30 per stool
Fixed Expense:$24,000

use the above information to answer the following questions.
1. Draw a CVP Graph for Small Steps and label the parts.
2. Calculate the Contribution Margin and contribution margin ratio.
3. Calculate Break Even in Units
4. How many steps stools would small steps need to sell to reach a profit of $10,000?
5. If they have a profit (net income) of $10,000 what is their Margin Safety Ratio?

 


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