1. ABC Inc. showed the following operating budget for the next year. Sales $2,100,000 Fixed cost $650,000 Total variable cost 350,000 Total cost 1,000,000 Net Income $1,100,000 Answer the following questions: Keep 8 decimal places for the contribution rate. (a) Calculate the total contribution margin and contribution rate (CR). Hint: For CR equation, consider multiplying both numerator and denominator by X (volume). (b) How much sales revenue does ABC Inc. need to generate to break-even? (c) Suppose the company decides to set a price of $150 for a unit of product that it sells. What is the break-even volume in units?
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