A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000, variable costs were $750,000. Determine the following: Round your percentage answers to the nearest whole number. a. Margin of safety expressed in dollars $ b. Margin of safety expressed as a percentage of sales % c. Contribution margin ratio % d. Operating income $
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Ответ:
a. $100,000
b. 10%
c. 25%
d. $25,000
Explanation:
a.
The MOS (Margin of Safety) means the excess sales over Break Even Point (the point of 0 profit).
Now formula is:
Margin of Safety = Actual Sales - Break Even Sales
So,
MOS = 1,000,000 - 900,000 = $100,000
b.
This is the previous answer as a percentage of total sales, which is 1,000,000. So we have the formula and
Margin of Safety Percentage = Margin of Safety / Actual Sales
So,
MOS (%) = 100,000/1,000,000 = 10%
c.
THe contribution margin ratio is the company's sales minus variable costs expressed as a ratio/percentage. The formula is:
Contribution Margin Ratio = (Sales - Variable Costs) / Sales
So,
CM Ratio = (1,000,000 - 750,000) / 1,000,000
CM Ratio = 25%
d.
The operating income is what a company has after it has subtracted both variable and fixed cost from its sales. The formula is:
Operating Income = Sales - Variable Costs - Fixed Costs
OI = 1,000,000 - 750,000 - 225,000 = 25000
OI = $25,000
Ответ: