Question

Pronghorn Company estimates that variable costs will be 53% of sales, and fixed costs will total $1,269,000. The selling price of the product is $5. Compute the break-even point in (1) units and (2) dollars. (Round intermediate calculation to 2 decimal places, e.g. 52.75.) (1) Break-even sales | units units (2) Break-even sales $ LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR PROBLEM VIDEO: SIMILAR PROBLEM Assuming actual sales are $3,000,000, compute the margin of safety in (1) dollars and (2) as a ratio. (Round ratio to 0 decimal places, e.g. 20.) (1) Margin of safety (2) Margin of safety ratio Click if you would like to Show Work for this question: Open Show Work

Answer 1

Solution 1. Compute the break-event point in tis units and (2) dollies (1) Break-even sales = 540,000 units () Break-even Sales = $2,700,000 moucing Note Len t ity as Variable cost to Sales = 534, Contribution to e Sales =47.7. or p/v Ratio 4th Inte know that; BES X Plv.patio = fixed cost BES X-47 = $1,9 69,000 BES - $2,700,000 B ES in unit = B es in dollors Selling Price = $2,700,000 $ 5 2.) = 540,000 units Assuming actual sales are $3,000,000, compute the margin of safety in (1) dollars and (a) as a ratio (1) Margin of safety = $309000 (2) Margin of safety Ratio = 0.18100 =10l.

Working Notes Margin of safety = Total Sales - BES. Un amore = $3,000,000 -.8,700,000 00000 = $ 300 000; se$ Margin of Ratio = Total sales - BES. - Total sales - $3,000,000 - 19,700,000 =- $3,000,000viy