Vance Corporation's Partial Income Statement Is as Follows Required:
Determine the Profit Margin

question 100

Essay

Vance Corporation's partial income statement is as follows: $$\begin{array} { l r } \text { Sales } & \$ 1,300,000 \\\text { Cost of sales } & 300,000 \\\text { Selling expenses } & 210,000 \\\text { General and admin. expenses } & 150,000\end{array}$$ Required:
Determine the profit margin.Would you invest in Vance Corporation? Explain your answer.

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Definitions:

Margin of Safety

The difference between actual sales and the break-even point, used to assess the risk of loss from declining sales.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Variable Costs

Expenses that change in proportion to the amount of goods produced or the volume of sales, including labor and materials.

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, highlighting the scalability of a company’s business model.