Question
In: Accounting
Units sold 1,180 Price $ 10 Sales $ 11,800 Variable manufacturing costs 4,720 Fixed manufacturing costs...
| Units sold | 1,180 | ||
| Price | $ | 10 | |
| Sales | $ | 11,800 | |
| Variable manufacturing costs | 4,720 | ||
| Fixed manufacturing costs | 2,360 | ||
| Variable selling costs | 1,180 | ||
| Fixed administrative costs | 1,180 | ||
Required:
Using the data provided, compute the margin of safety and margin of safety ratio.
mos:
mos ratio:
Solutions
Expert Solution
| Margin of Saftey = Total Sales - Break Even Sales | ||
| =$ 11,800 -$ 7080 | ||
| Margin of Saftey = $4,720 | ||
| Working Notes | ||
| Sales | 11,800 | |
| less : Variable costs | ||
| Manufacturing costs | 4,720 | |
| Selling Costs | 1,180 | 5,900 |
| Contribution Margin | 5,900 | |
| Contribution Margin Ratio | Contribution Margin / Sales *100 | |
| = $ 5900 / $ 11800 *100 | ||
| =50% | ||
| Fixed Costs : | |
| Fixed Manufacturing costs | $ 2360 |
| Fixed Admnistrative costs | $ 1180 |
| Total Fixed Costs | $ 3540 |
| Break even sales | Fixed Cost / Contribution margn ratio | |
| =$ 3540 / 50% | ||
| =$7080 | ||
| margin of safety ratio | =Total Sales - Break Even Sales/Total Sale | |
| =$4,720/$11,800*100 | ||
| 40% | ||
ekkarill92 answered 1 year agoRelated Solutions
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Machine Hours
Fixed Production Costs
Fixed Overhead Costs
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Unit Selling price
Machine Hours per
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Total Sales Dollars
Variable Cost per
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Total Contribution
Dollars
Contribution Dollars per
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Contribution Margin
Percentage
Item #1
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10000
$25,000
$2,000
22500
$10
Item #2
$55,000
20000
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Item #3
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Item #4
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Variable Direct Costs Machine Hours Fixed Production Costs Fixed Overhead Costs Units Sold Unit Selling price...
Variable Direct Costs
Machine Hours
Fixed Production Costs
Fixed Overhead Costs
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Total Sales Dollars
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Contribution Margin
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10000
$25,000
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$10
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20000
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23000
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$42,000
7500
$15,000
$1,750
27500
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Item #4
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5000
$5,000
$500
11000
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Complete the grey cells in the
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No of units Fixed costs Total variable
costs Total Costs Total Sales
0 15,000 0 15,000
0
50 15,000 10,500
25,500 15,000
100 15,000 21,000
36,000 30,000
150 15,000 31,500
46,500 45,000
200 15,000 42,000
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