# Vines and Daughter manufactures and sells swimsuits for \$40 each. The estimated income statement for

Vines and Daughter manufactures and sells swimsuits for \$40 each. The estimated income statement for 2012 is as follows: Sales ………………………………….\$2,000,000 Variable costs ………………………….1,100,000 Contribution margin …………………….900,000 Fixed costs ………………………………765,000 Pretax earnings……………………….. \$ 135,000 REQUIRED A. Compute the contribution margin per swimsuit and the number of swimsuits that must be sold to break even. B. What is the margin of safety in the number of swimsuits? C. Suppose the margin of safety was 5,000 swimsuits in 2012. Are operations more or less risky in 2013 as compared to 2012? Explain. D. Compute the contribution margin ratio and the breakeven point in revenues. E. What is the margin of safety in revenues? F. Suppose next year s revenue estimate is \$200,000 higher. What would be the estimated pretax earnings? G. Assume a tax rate of 30%. How many swimsuits must be sold to earn after-tax earnings of \$180,000?