Waterways markets a simple water control and timer that it mass-produces. During 2016, the company sold 696,000 units at an average selling price of per solution $4.20 per unit. The variable expenses were $1,900,080, and the fixed expenses were $683,256. a. What is the product’s contribution margin ratio?
b. What is the company’s break-even point in units and in dollars for this product?
c. What is the margin of safety, both in dollars and as a ratio?
d. If management wanted to increase its income from this product by 10%, how many additional units would have to be sold to reach this income level?