Breakeven point & Margin of safety
Question # 00001153 Subject: Business / Accounting Due on: 10/15/2013 Posted On: 09/16/2013 03:50 AM
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Question
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. (%)