he sales and cost data for two companies in the transportation industry are as follows:
X Company | Y Company | ||||||||||||
Amount | Percent | Amount | Percent | ||||||||||
Sales | $ | 120,000 | 100 | $ | 120,000 | 100 | |||||||
Variable costs | 72,000 | 60 | 36,000 | 30 | |||||||||
Contribution margin | 48,000 | 40 | 84,000 | 70 | |||||||||
Fixed costs | 36,000 | 72,000 | |||||||||||
Operating income (πB) | $ | 12,000 | $ | 12,000 | |||||||||
Y Company's margin of safety (MOS) in sales dollars (rounded) is:
Calculation of Y's Comapny Margin of safety in sales dollars is as follows: |
|
Formula: |
|
Margin of Safety in dollars= Profit/ Profit Volume Ratio |
|
As given in question: |
|
For Company Y |
|
Particulars |
"Amount (in dollars)" |
Sales |
120000 |
(-) Variable expenses |
36000 |
Contribution |
84000 |
(-) Fixed Expenses |
72000 |
Profit i.e Net Income |
12000 |
Calculation of Contribution to sales ratio i.e Profit Volume Ratio : |
|
Formaula: |
|
Contribution to sales ratio i.e Profit Volume Ratio= |
(Contribution/ Sales )*100 |
(In percentage) |
=(84000/120000)*100 |
70.00% |
|
Hence, Margin of safety in dollars= |
12000/70% |
17142.85714 |
|
Hence Margin of Safety in sales dollars for Compnay Y (rounded off) is 17143 |
|
he sales and cost data for two companies in the transportation industry are as follows: X...
The sales and cost data for two companies in the transportation industry are as follows: X Companv Y Compan AmountPercent Amount Percent Sales Variable costs Contribution margin Fixed costs Operating income 100 60 100 30 70 $120,000 72,000 48,0004 36,000 2,00 $120,000 36,000 84,000 72,000 $12.000 The annual breakeven revenue for X Company is? X Company's margin of safety ratio (MOS%) is? X Company's degree of operating leverage is?
The following sales and cost data (in thousands) are for two companies in the transportation industry: Company A Percent of Amount Sales $140,000 100% 70,000 $ 70,000 50% 22,400 $ 47,600 Sales Variable costs Contribution margin Fixed costs Operating profit Company B Percent of Amount Sales $140,000 100% 42,000 $ 98,000 70% 43,400 $ 54,600 30 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. 1-b. If sales increase from the present level, which company benefits more?...
The following sales and cost data (in thousands) are for two companies in the transportation industry: Company A Percent of Amount Sales $160,000 100% 80,000 50 $ 80,000 28,000 $ 52,000 Sales Variable costs Contribution margin Fixed costs Operating profit Company B Percent of Amount Sales $ 160,000 32,000 $ 128,000 80% 53,000 $ 75,000 100% 20 50% Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. 1-b. If sales increase from the present level, which company...
The following sales and cost data (in thousands) are for two companies in the transportation Industry: Sales Variable costs Contribution margin Fixed costs Operating profit Company A Percent of Amount Sales $100,000 1000 50,000 50 $ 50,000 504 15,000 $ 35,000 Company B Percent of Amount Sales $100,000 1000 30,000 $70,000 40,000 $ 30,000 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. 1-b. If sales increase from the present level, which company benefits more? 2. Assume...
Operating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc. Quintex, Inc. $875,000 175,000 $700,000 630,000 $70,000 Sales $700,000 350,000 $350,000 280,000 $70,000 Less: Variable costs Contribution margin Less: Fixed costs Operating income Required: 1. Compute the degree of operating leverage for each company. Trimax Quintex 2. Compute the break-even point in dollars for each company Trimax, Inc. Quintex, Inc. Why is the break-even point for Quintex, Inc., higher? $700,000 350,000 $350,000 $875,000...
Operating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc. Quintex, Inc. Sales $500,000 $625,000 Less: Variable costs 250,000 125,000 Contribution margin $250,000 $500,000 Less: Fixed costs 200,000 450,000 Operating income $50,000 $50,000 Required: 1. Compute the degree of operating leverage for each company. Trimax Quintex 2. Compute the break-even point in dollars for each company. Trimax, Inc. $ Quintex, Inc. $ Why is the break-even point for Quintex, Inc., higher? 3. Suppose...
Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Toronto and one in Vancouver. The firm classifies the direct costs of consulting jobs as variable costs. A segmented contribution format income statement for the company's most recent year is given below: Total Company $ 800,000 100.00% 444,000 55.50 Sales Variable expenses Office Vancouver 100% $ 680,000 30 408,000 Toronto $ 120,000 36,000 100% 60 Contribution margin Traceable...
Please help with the following: Cost-Volume-Profit Relations: Missing Data Following are data from 4 separate companies. Supply the missing data in each independent case. Case 1 Case 2 Case 3 Case 4 Sales revenue $100,000 $100,000 Answer Answer Contribution margin $40,000 Answer $20,000 Answer Fixed costs $20,000 Answer Answer Answer Net income Answer $5,000 $9,000 Answer Variable cost ratio Answer 0.50 Answer 0.20 Contribution margin ratio Answer Answer 0.50 Answer Break-even point (dollars) Answer Answer Answer $25,000 Margin of safety...
TexFab manufactures two products, GT450 and GT600 that have the following sales and cost information. GT450GT600Total Amount%Amount%Amount%Sales$ 25,000100$ 75,000100$ 100,000100.0Variable costs20,0008037,5005057,50057.5Contribution margin$ 5,00020$ 37,50050$ 42,50042.5Fixed costs20,000Operating income$ 22,500 Round all dollar answers up, to the nearest whole number.Required:1. What is the breakeven point in dollars if sales remain at the same sales mix reflected in the income statement presented above?2. If the TexFab Company's sales mix becomes $50,000 of product GT450 and $50,000 of product GT600, what is the breakeven...
Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March. Sales Variable costs Contribution margin Fixed costs traceable to divisions Division responsibility margin Common fixed costs Income from operations 30 Investment Centers Butterfield, Inc Division 1 Dollars % Dollars % $ 470,000 100.00% $ 350,000 100% 246,000 52.34 210,000 6 0 $ 224,000 47.66% $ 140,000 40% 131,100 27.89 7 3,500 21 $ 92,900 19.77% $ 66,500 19% 40,000 8.51 $ 52,900 11.26% Division 2...