E22-13 Glacial Company estimates that variable costs will be 62.5% of sales, and fixed costs will… 1 answer below »

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E22-13Glacial Company estimates that variable costs will be 62.5% of sales, and fixed costs will total $600,000. The selling price of the product is $4.

Instructions

(a) Prepare a CVP graph, assuming maximum sales of $3,200,000.

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(Note:Use $400,000increments for sales and costs and 100,000 increments for units.)

(b) Compute the break-even point in (1) units and (2) dollars.

(c) Assuming actual sales are $2 million; compute the margin of safety in (1) dollars and (2) as a ratio.

 

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