Homework Answers
Solution 1:
Margin of safety = current sales - break even sales
= $150000 - $120000
= $30,000
Solution 2:
Margin of safety as a percentage = (current sales - break even sales) / Current sales
= ($150000 - $120000) / $150000
= $30,000 / $150000
= 20%
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Once the break-even point has been reached, net operating income
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sold.
unit contribution margin
unit selling price
variable expense per unit
fixed expense per unit
Knowledge Check 04
Break-even point is the level of sales at which ______.
total profits equals total costs
total profits exceed total costs
total revenue equals total costs
total sales equal total projections
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