Suppose Doral Corp.’s breakeven point is revenues of $1,100,000.Fixed costs are $660,000.Required1. Compute the contribution margin percentage.2. Compute the selling price if variable costs are $16 per unit.3. Suppose 95,000 units are sold. Compute the margin of safety in units and dollars.

The contribution margin percentage can be calculated using the formula:

Contribution Margin Ratio = (Sales - Variable Costs) / Sales

However, in this case, we are only given the breakeven point and fixed costs. The breakeven point is the point where total revenue equals total costs. Therefore, at the breakeven point, Sales = Fixed Costs + Variable Costs.

We can rearrange this to find Variable Costs = Sales - Fixed Costs.

Substituting the given values, Variable Costs = $1,100,000 -$660,000 = $440,000.

Now we can calculate the Contribution Margin Ratio = ($1,100,000 -$440,000) / $1,100,000 = 0.6 or 60%.

To compute the selling price per unit, we need to know the variable cost per unit. Given that the variable costs are $16 per unit, and we know the contribution margin ratio is 60%, we can use the formula:

Selling Price = Variable Cost / (1 - Contribution Margin Ratio)

Substituting the given values, Selling Price = $16 / (1 - 0.6) =$40 per unit.

The margin of safety can be calculated in units and dollars using the formulas:

Margin of Safety in Units = Actual Sales - Breakeven Sales Margin of Safety in Dollars = Margin of Safety in Units * Selling Price

Given that 95,000 units are sold, the breakeven sales in units would be $1,100,000 /$40 = 27,500 units.

Therefore, Margin of Safety in Units = 95,000 - 27,500 = 67,500 units.

And, Margin of Safety in Dollars = 67,500 * $40 =$2,700,000.