Question

Using the data provided below, please provide:

1. Contribution Margin (CM)

2. Contribution Margin Ratio (CMR)

3. Breakeven in Sales Dollars

4. Margin of Safety (MOS)

5. MOS ratio

    

Units sold:          20,000

Selling price: $             20

Variable manufacturing costs: $    140,000

Fixed manufacturing costs: $      92,000

Variable selling costs: $      50,000

Fixed administrative costs: $      15,000

Answer 1

--Requirements

A	Sales revenue [20000 x $ 20]	$400,000
B	Variable manufacturing cost	$140,000
C	Variable administrative cost	$15,000
D = A - B - C	Contribution margin (CM)	$245,000	Answer
E = (D/A) x 100	CM Ratio	61.25%	Answer
F	Fixed Cost	$107,000
G = F/E	Breakeven in Sales Dollars	$174,694	Answer
H = A - G	Margin of Safety Dollar	$225,306	Answer
I = (H/A) x 100	MOS Ratio	56.33%	Answer