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# Breakeven point & Margin of safety

Question # 00001153
Due on: 10/15/2013
Posted On: 09/16/2013 03:50 AM
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 1. Last month when Harrison Creations, Inc., sold 40,000 units, total sales were \$300,000, total variable expenses were \$240,000, and fixed expenses were \$45,000.

Required:

a.

What is the company’s contribution margin (CM) ratio?

b.

Estimate the change in the company’s net operating income if it were to increase its total sales by \$1,500.

2. [The following information applies to the questions displayed below.]

Maxson Products distributes a single product, a woven basket whose selling price is \$8 and whose variable cost is \$6 per unit. The company’s monthly fixed expense is \$5,500.

 Required: a. Compute for the company’s break-even point in unit sales using the equation method. b.Compute for the company’s break-even point in sales dollars using the equation method and the CM ratio.(Do not round intermediate calculations.Round your CM ratio to 2 decimal places.) CM ratio______________________ Break-even point in dollar sales________________________________

 4. Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budget appear below:

 Selling price \$25 per unit Variable expenses \$15 per unit Fixed expenses \$8,500 per month Unit sales 1,000 units per month

 Required: a. Compute the company’s margin of safety.

b. Compute the company’s margin of safety as a percentage of its sales. (%)

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#### Breakeven point & Margin of safety

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Posted On: 09/16/2013 03:52 AM
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Breakeven_point_Margin_of_safety_16_Sept.docx (16.99 KB)
Preview: \$5,500 xxxxxxxxxx Compute xxx the company’s xxxxxxxxxx point in xxxx sales xxxxx xxx equation xxxxxx b Compute xxx the company’s xxxxxxxxxx point xx xxxxx dollars xxxxx the equation xxxxxx and the xx ratio xxxxx xxx round xxxxxxxxxxxx calculations  Round xxxx CM ratio xx 2 xxxxxxx xxxxxx )CM xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx point in xxxxxx sales________________________________ 3 xxxxxxx for xxx xxxxxxxxxxx break-even xxxxx in unit xxxxx using the xxxxxxx method x xxxxxxx for xxx company’s break-even xxxxx in sales xxxxxxx using xxxxxxx xxxxxx and xxx CM ratio xxx not round xxxxxxxxxxxx calculations xxxxx xxxx CM xxxxx to 2 xxxxxxx
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