Question

Exercise 11-16 Swifty Company estimates that variable costs will be 62% of sal and fixed costs will total $1,444,000. The selling price of the product is $10. Compute the break-even point in (1) units and (2) doll mediate calculation to 2 decimal places, e.g. 52.75.) (1) Break-even sales (2) Break-even sales LINK TO TEXT LINK TO TEXT SIMILAR PROBLEM VIDEO SIMILAR PROBLEM Assuming actual sales are $4,000,000, compute the marg (1) dollars and (2) as a ratio. (Round ratio to o decimal places, e.g. 20.) (1) Margin of safety (2) Margin of safety ratio Click if you would like to Show Work for this question: Open Show

Answer 1

(1)	Breakeven Sales	380,000	Units
(2)	Breakeven Sales	$ 3,800,000

Explanation:

1) CM Per Unit:

= Sales - Variable Cost

= $ $ 10 - ( $ 10 ×62%) = $ 3.8 Per Unit

2) CM Ratio:

= ( 1 - variable ratio)

= ( 1- 62%) = 0.38

3) Breakeven ( In Units)

= Fixed Expense ÷ CM per unit

= $ 1,444,000 ÷ $3.8

= 380,000 Unit

4) Breakeven ( in dollars)

= Fixed Exp ÷ CM ratio

= $ 1,444,000 ÷ 0.38

= $ 3,800,000

Part : B

(1)	Margin of safety	$ 200,000
(2)	Margin of safety ratio	5%

Explanation:

1) MOS:

= Actual Sales - Breakeven Sales

= $ 4,000 ,000 - 3,800,000

= $ 200,000

2) MOS%

= $ 200,000 ÷ $ 4,000,000 × 100

= 5%