Question

CALCULATOR PRINTER VERSION EBACK NEXT ES Exercise 5-16 a,c (Video) Glacial Company estimates that variable costs will be 62.5% of sales and fixed costs will total $600,000. The selling price of the product is $4 Compute the break-even point in (1) units and (2) dollars. (1) Break-even sales udy (2) Break-even sales $ LINK TO TEXT LINK TO TEXT VIDEO SORTLAR KERCESE Assuming actual sales are $2,000,000, compute the margin of safety in (1) dollars and (?) as a ratio tooth chang (1) Margin of safety (2) Margin of safety ratio Click if you would like to show Work for this question Coen Show Work LINK TO TURTOWY VIDEO SEKILAR EXERCISE Question Attempt of sused di 19 MacBook Pro Search or Type URL 3 -0 Il 5 6 7 8 E R т Y U 1 0 Р D F G H J 0 K L > ? с ? V B M N . command option

Answer 1

Part 1

Selling price	$4
Variable costs(62.5% of sales)	$2.5
Contribution margin per unit	$1.5
Contribution margin ratio	37.5%
Contribution margin ratio	$600000

1.Breakevenpoint = Fixed Cost/contribution per unit =$600000 / $1.5 = 400000 units

2.Break-even sales = Fixed Costs/Contribution margin ratio =$600000 / 37.5% = $1600000

Part 2

1. Actual sales = $2000000

Breakeven sales = $1600000

Margin of safety = Actual sales -   Breakeven sales = $400000

2. Margin of safety ratio = (Margin of safety sales/Actual Sales) * 100

=($400000 / $2000000 ) * 100 =20%

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