Question

Sheffield Company estimates that variable costs will be 60% of sales, and fixed costs will total...

Sheffield Company estimates that variable costs will be 60% of sales, and fixed costs will total $912,000. The selling price of the product is $6.

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
(2) Break-even sales $

LINK TO TEXT

LINK TO TEXT

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

%
0 0
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Answer #1
Statementshowing Computations
Paticulars Amount
Sales price per unit                         6.00
Variable cost per unit= 6*.60                         3.60
Contribution per unit = 6 - 3.60                         2.40
CM Ratio = 2.40/6 40.00%
Fixed costs            912,000.00
Break even point in units = 912000/2.4            380,000.00
Break even point in $ = 912000/40%        2,280,000.00
Actual Sales        3,000,000.00
MOS in $ = 3000,000 - 2280,000            720,000.00
MOS ratio = 720,000/3000,000 24.00%
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