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:

Total Job Cost

The sum of all expenses directly associated with the production of a specific job, including materials, labor, and overhead costs.

Estimated Total Manufacturing Overhead

The projected or forecasted total of all manufacturing overhead costs for a specific period.

Manufacturing Costs

Manufacturing costs are the costs incurred in the process of producing a product, which include direct materials, direct labor, and manufacturing overhead.

Markup

The percentage added to costs to determine selling price, typically used in retail to cover costs and earn a profit.