Davison Company Has Fixed Costs of $315,000 and a Contribution

question 144

Essay

Davison Company has fixed costs of $315,000 and a contribution margin ratio of 24%.If sales are expected to be $1,500,000,what is the margin of safety in percent?

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Definitions:

FICA

Refers to the Federal Insurance Contributions Act taxes, which are payroll taxes paid by both employees and employers to fund Social Security and Medicare.

Overtime Earnings

Compensation received for hours worked in excess of the standard workweek hours, often calculated at a rate higher than the regular hourly rate.

Liability Accounts

Accounts on a balance sheet that represent what a company owes to others, such as loans, accounts payable, mortgages, deferred revenues, and accrued expenses.

Expense Accounts

These accounts are used in accounting to track the consumption of assets or services that contribute to the operation and revenue generation of the business.