1.
Contribution margin ratio = (30- 24) / 30 = 20%
Break even point in dollars = fixed cost / contribution margin ratio = 108410/20% = $542,050
2.
Margin of safety ratio = (actual sales- breakeven sales) actual sales = (740000 -542050)/ 740000 = 26.75%
3.
Rrquired sales = (fixed cost+ net income)/ contribution margin ratio = (108410+107590)/20% = $1,080,000
Do It Review 5-5 Sandhill Company makes radios that sell for $30 each. For the coming...
Do It! Review 5-5 Crane Company makes radios that sell for $40 each. For the coming year, management expects fixed costs to total $102,340 and variable costs to be $32 per unit. Compute the break-even point in dollars using the contribution margin (CM) ratio. Break-even point $ Compute the margin of safety ratio assuming actual sales are $700,000. (Round margin of safety ratio to 2 decimal places, e.g. 10.50.) Margin of safety % Compute the sales dollars required to earn...
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DO IT! 5 Zootsuit Inc, makes travel bags that sell for $56 each. For the coming year, management expects fixed costs to total $320,000 and variable costs to be $42 per unit. Compute the following: So-42/56 257 a) break-even point in dollars using the contribution margin (CM) ratio: 320100 = (1280,000 6.2.5 b) the margin of safety and margin of safety ratio assuming actual sales are $1,382,400; and 11382,400 - 1280000 c) the sales dollars required to earn net income...
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Exercise #5: Margin of Safety and Target Net Income Hakala Corporation makes surfboards that sell for $5,600 each. For the upcoming year, management expects fixed costs to total $3,200,000 and variable costs to be $4,200 per unit. Compute the following: (a) break-even point in dollars using the contribution margin ratio, (b) the margin of safety and margin of safety ratio assuming actual sales are $13,824,000, and (c) the sales dollars required to earn net income of $4,100,000.