Stellar manufactures and sells swimsuits for $40.00 each. Theestimated income statement for 2017 is as follows:
Sales: $2,000,000, Variable costs: 1,090,000, contributionmargin: 910,000. Fixed costs: 765,000. Pretax earnings: 145,000
1.Compute the contribution margin per swimsuit and the number ofswimsuits that must be sold to break even. (Roundcontribution margin per swimsuit to 2 decimal places, e.g. 15.25and break even swimsuits to 0 decimal places, e.g.125.)
2.What is the margin of safety in thenumber of swimsuits?
3.Compute the contribution margin ratio and the breakeven point inrevenues. (Round contribution margin ratio to 3 decimalplaces, e.g. 0.256 and breakeven point to 0 decimal places, e.g.125.)
4.What is the margin of safety inrevenues? (Round answer to 0 decimal places, e.g.125.)
5.Suppose next year’s revenue estimateis $200,000 higher. What would be the estimated pretaxearnings?
6.Assume a tax rate of 30%. How many swimsuits must be sold toearn after-tax earnings of $180,000? (Round answer to 0decimal places, e.g. 125.)
