Ans. 1 a | Contribution margin ratio = Contribution margin / Sales * 100 | ||
$182,000 / $700,000 * 100 | |||
26% | |||
Margin of safety (in dollars) = Operating profit / Contribution margin ratio | |||
$98,800 / 26% | |||
$380,000 | |||
Ans. 1 b | Margin of safety ratio = Margin of safety / Sales * 100 | ||
$380,000 / $700,000 * 100 | |||
54.29% | |||
Ans. 3 | Operating profit = (Sales * Contribution margin ratio) - Operating or fixed cost | ||
($600,000 * 26%) - $83,200 | |||
$156,000 - $83,200 | |||
$72,800 | |||
Margin of safety (in dollars) = Operating profit / Contribution margin ratio | |||
$72,800 / 26% | |||
$280,000 | |||
Check my work Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells...
Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the...
Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the...
Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the...
Chapter 9 Assignment Saved Help Save & Exit Submit Check my work Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he...
In June 2008, when gasoline prices were at an all-time high (more than $3.81 per gallon), Chrysler Motor Company promoted its Jeep vehicle with the offer of either $4,250 off the price of the vehicle or the guarantee that the buyer would not pay more than $2.75 per gallon of gas for the next 3 years (the details of the guarantee could vary by dealer). Required: 1. Assume that the Jeep vehicle you are interested in gets 15 mpg combined...
Check my work 5 Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $40 per unit. Variable expenses are $20.00 per unit, and fixed expenses total $160,000 per year. Its operating results for last year were as follows: 4 points Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 1,080,000 540,000 540,000 160,000 $ 380,000 eBook Print Required: Answer each question independently based on the original data: 1. What is the product's CM ratio? 2. Use...
песк my work Feather Friends, Inc., distributes a high-quality wooden birdhouse that sells for $120 per unit. Variable expenses are $60.00 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows Sales Variable expenses Contribution margin Fixed expenses 3,120,000 1,560,000 1,560,000 180,000 $ 1,380,000 Net operating income Required Answer each question independently based on the original data 1. What is the product's CM ratio? 2. Use the CM ratio to determine the...
Work Depot sells office supplies to area corporations and
organizations. Tom Dooley, founder and CEO, has been disappointed
with the operating results and the profit margin for the last two
years. Business forms are mostly a "commodity" business with low
profit margins. To increase profit margins and gain competitive
advantages, Dooley introduced "Desk-Top Delivery" service (smaller
orders, same-day delivery). The business seems to be as busy as
ever. Yet, the operating income has been declining. To help
identify the root...