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A Company Has a Margin of Safety of 25%, a Contribution

question 176

Essay

A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000.
(a)What is the break-even point in sales dollars?
(b)What is the operating income?
(c)If neither the relationship between variable costs and sales nor the amount of fixed costs is expected to change in the next year, how much additional operating income can be earned by increasing sales by $110,000?


Definitions:

Goodwill Messages

Communications that are intended to foster positive relationships by expressing kindness, gratitude, or support.

Business Purpose

The business purpose defines the reason for the existence of a business or a business transaction, often guiding its goals, strategies, and operations.

Exaggerated

Describes something that has been presented in a way that makes it seem more significant or intense than it actually is.

Routine Request

A standard or common inquiry or petition, usually following a predictable pattern or format.

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