Question

Stones Manufacturing, sells a marble slab for $1500. Fixed costs are $31,000, while the variable costs are $450 per slab. The company currently plans to sell 240 slabs this month. What is the margin of safety assuming 75 slabs are budgeted?

		$207,714.286
		$31,000
		$68,214.2857
		$315,714.286

Answer the following questions using the information below:

Southwestern College is planning to hold a fund raising banquet at one of the local country clubs. It has two options for the banquet:



Southwestern College has budgeted $1,800 for administrative and marketing expenses. It plans to hire a band which will cost another $800. Tickets are expected to be $30 per person. Local business supporters will donate any other items required for the event.


Which option has the lowest breakeven point?

		Option one
		Option two
		Both options have the same breakeven point.
		The lowest breakeven point cannot be determined.

Tony Manufacturing produces a single product that sells for $90. Variable costs per unit equal $45. The company expects total fixed costs to be $83,000 for the next month at the projected sales level of 2900 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.Suppose that management believes that a 12% reduction in the selling price will result in a 12% increase in sales. If this proposed reduction in selling price is implemented ________.

		operating income will increase by $19,418
		operating income will increase by $11,902
		operating income will decrease by $31,320
		operating income will decrease by $19,418

Answer 1

Note: As per HOMEWORKLIB POLICY, only one question is allowed to answer at a time, so here first question is being answered :

OPTION: $68,214.2857

EXPLANATION:

Contribution margin ratio = contribution margin per unit/sales price per unit

= ($1500 - $450)/$1500 = 70%

Break even point (dollar sales) = fixed expenses/contribution margin ratio

= $31000/70%

= $44285.7143

therefore,

margin of safety = total sales - break even sales

= (75 x $1500) - $44285.7143

= $112500 - $44285.7143

= $68214.2857