.Contribution Margin, Break-Even Units, Contribution Margin Income Statement, Margin of Safety
Zebra Company manufactures custom-designed skins (covers) for iPods ® and other portable MP3 devices. Variable costs are $10.80 per custom skin, the price is $16, and fixed costs are $66,560.
Required:
1. What is the contribution margin for one custom skin? Round your answer to the nearest cent.
$ _____ per custom skin
2. How many custom skins must Zebra Company sell to break even?
_____ custom skins
3. If Zebra Company sells 13,000 custom skins, what is the operating income?
$ _____
4. Calculate the margin of safety in units and in sales revenue if 13,000 custom skins are sold.
Margin of safety in units _____ units
Margin of safety in sales revenue $ _____