Question

Question 1: Talal Industries developed the following information for the product itsells: of total Sales Variable cost of goods sold Fixed cost of goods sold Variable selling costs Variable administrative costs Fixed selling adminstrative costs Selling price nunu 23.00 800,000 10% 2.00 500,000 300,000 50 100,000 Fixed Units Sales our ended December 31, 2017, the company produced and sold 100,000 units of produc CVP income statement using the contribution margin format for Talal Ind For the year ended December Instructions (a) Prepare a CVP income statemer 2017. » Determine the Contribution Margin in unit and ratio. What was the company's break-even poi What was the company's margin of safety company's break-even point in units and dollar values in 2017? ompany's margin of safety and degree of Operating Leverage in dolla answer with an explanation
please provide step by step answer prefairable handwritten

Answer 1

a)

Sales(100000*50)	5000000
Less:
Variable COGS (23*100000)	2300000
Selling costs (5000000*10%)	500000
Administrative costs (100000*2)	200000
Contribution margin	2000000
Less:
Fixed COGS	800000
Fixed selling	500000
Fixed administrative	300000
Profit	400000

b)

Contribution margin per unit = 2000000/100000 = 20

Contribution margin ratio = (20/50)*100 = 40%

c)

Breakeven point(units) = Fixed cost/Contribution per unit = (800000+500000+300000)/20 = 80000 units

Breakeven point ($) = 80000 units * 50 = 4000000

d)

Margin of safety = (100000-80000)/100000 = 20%

Degree of operating leverage = Contribution margin / (Contribution margin-Fixed costs)

= (5000000-2300000-500000-200000) / (5000000-2300000-500000-200000-800000-500000-300000)

= 2000000/400000

= 5 times