Posted by **Judy** on Friday, August 20, 2010 at 1:14pm.

Larry sells each unit for $500. Variable costs per unit equal $300. Totalfixed costs equal $800,000. Larry is currently sellig 5,000 units per period and would like to earn net income of $400,00.

comput: Break-evn point indollras, sales units necessary to attain desired income, and margin of safety ration for current operations.

I have break-even point: 4000

Desired sales: 204

Margin of safety? not sure where to go from here.

- Accounting -
**bobpursley**, Friday, August 20, 2010 at 1:31pm
Margin of safety is based on current sales, 5000.

break even: n*500-n*300-800,000=0

2OON=800,000

n=4000

net income: 500n-300n-800,000=400,000

200n=1.2Million

n= 6000 units to net 400,000

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