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##### Breakeven point & Margin of safety

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Question;1.;Last month;when Harrison Creations, Inc., sold 40,000 units, total sales were \$300,000;total variable expenses were \$240,000, and fixed expenses were \$45,000.;Required;a.;What is the company?s contribution;margin (CM) ratio?;b.;Estimate the change in the;company?s net operating income if it were to increase its total sales by;\$1,500.;2.;[The;following information applies to the questions displayed below.];Maxson Products distributes a;single product, a woven basket whose selling price is \$8 and whose variable;cost is \$6 per unit. The company?s monthly fixed expense is \$5,500.;Required;a.;Compute for the company?s;break-even point in unit sales using the equation method.;b.Compute for the;company?s break-even point in sales dollars using the equation method and;the CM ratio.(Do;not round intermediate calculations.Round;your CM ratio to 2 decimal places.);CM ratio;Break-even point in dollar;sales;4.;Mohan;Corporation is a distributor of a sun umbrella used at resort hotels. Data;concerning next month?s budget appear below;Selling price;\$25;per unit;Variable expenses;\$15;per unit;Fixed expenses;\$8,500;per month;Unit sales;1,000;units per month;Required;a.;Compute the company?s margin of;safety.;b. Compute the company?s margin of safety as a;percentage of its sales. (%)

Paper#45326 | Written in 18-Jul-2015

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