A Company with a Break-Even Point at $900,000 in Sales

question 117

Essay

A company with a break-even point at $900,000 in sales revenue had fixed costs of $225,000. When actual sales were $1,000,000, variable costs were $750,000. Determine
(a) the margin of safety expressed in dollars,
(b) the margin of safety expressed as a percentage of sales,
(c) the contribution margin ratio, and
(d) the operating income.

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Definitions:

Post-Traumatic Stress Disorder

A psychiatric disorder that may occur in people who have experienced or witnessed a traumatic event.

Eating Disorders

Mental disorders characterized by abnormal or disturbed eating habits, which negatively affect a person's health and well-being.

Anorexia Nervosa

An eating disorder characterized by an intense fear of gaining weight and a distorted body image leading to self-starvation.

Dissociation

A mental process that causes a lack of connection in a person's thoughts, memory, and sense of identity.