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Contribution per CD unit (from #1 above) $6.40
Contribution margin ($9.00-$2.60)/$9.00=.711 or 71.1%
Break-even volume in units = $6.40 = 82,031.25 units
Break-even volume in dollars = .711 = $738,396.62
= 82,031.25 x $9.00 = $738,281.25
(Difference is due to rounding the contribution margin percent)
C. Calculate the net profit if 1 million CDs are sold
Total Sales (1,000,000 units x $9.00) $9,000,000
Less: Total Variable Cost (1,000,000 units x $2.60) 2,600,000
Less: Total Fixed Cost 525,000
Net Profit $5,875,000
D. Calculate the necessary CD unit volume to achieve a $200,000 profit
Profit objective = $200,000
Fixed cost = $525,000
Contribution per Unit = $6...
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