1. Cartersville Co. reports the following data: Sales $561,500 Variable costs (308,800) Contribution margin $252,700 Fixed...

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1. Cartersville Co. reports the following data: Sales $561,500 Variable costs (308,800) Contribution margin $252,700 Fixed...

1. Cartersville Co. reports the following data:

Sales	$561,500
Variable costs	(308,800)
Contribution margin	$252,700
Fixed costs	(191,100)
Operating income	$61,600

Determine Cartersville Co.’s operating leverage. Round your answer to one decimal place.

2. The Ira Company has sales of $680,000, and the break-even point in sales dollars is $496,400.

Determine the Ira company's margin of safety as a percent of current sales.
%

business accounting

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Answer 1

Answer #1

1. Operating leverage = Contribution margin/Operating income

= 252,700/61,600

= 4.1

2. Margin of Safety = (Sales - Breakeven sales) /Sales

= (680,000-496,400)/680,000

= 27%

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Answer 2

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1. Cartersville Co. reports the following data: Sales $561,500 Variable costs (308,800) Contribution margin $252,700 Fixed...

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