The Following Monthly Budgeted Data Are Available for the International

question 49

Essay

The following monthly budgeted data are available for the International Company:
Budgeted net operating income for the month is $220,000.
Required:
a. Calculate the break-even dollar sales for the month.
b. Calculate the margin of safety.
c. Calculate the operating leverage.

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Definitions:

Break-Even Point

The point at which total costs and total revenue are equal, meaning no net loss or gain, and the business is breaking even.

Contribution Margin

The contribution margin represents the portion of sales revenue that is not consumed by variable costs and can contribute to covering fixed costs and generating profit.

Variable Cost

Costs that change in proportion to the level of production or sales activity.

Units

Basic measures or quantities of product or service in business operations, often used in contexts such as inventory, production, and sales.