Contribution margin:
= 6,900 X ($40 - $24)
= $110,400
Net operating income:
= Contribution margin / Degree of operating leverage
= $110,400 / 4
= $27,600
Fixed cost:
= $110,400 - $27,600
= $82,800
Contribution margin ratio:
= ($40 - $24) / $40
= 40%
Breakeven sales:
= $82,800 / 40%
= $207,000
Margin of safety in dollars:
= (6,900 X $40) - $207,000
= $69,000
Margin of safety = 69000
A manufacturer sold 6,900 units of its product at the price of $40 last year. The...
A manufacturer sold 6,340 units of its product at the price of $40 last year. The variable cost per unit was $24. Their degree of operating leverage was 4. What was the margin of safety (in $) for this company last year? (All answers are whole numbers -- unless specified otherwise. You should NOT include the $ sign or a comma. E.g.. you should type 1000 for one thousand. Negative numbers should be added with a minus sign, e.g., -1000...
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A producer of a single product had the following results for the year just ended: Unit Sales Margin of Safety in Units Net operating income 6,210 units 263 units 6,575 How much was fixed cost for the year? (All answers are whole numbers -- unless specified otherwise. You should NOT include the $ sign or a comma. E.g., you should type 1000 for one thousand. Negative numbers should be added with a minus sign, e.g., -1000 for a decrease or...
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