In: Accounting
The Rose Williams Company has a C/M ratio of 36%. Breakeven sales are Rs. 160,000. The company earned a profit of Rs. 28,800 during the year.
Required:
(a) Fixed expense.
(b) Variable expense for the
year
(b) Sales for year
(d) Margin of safety ratio.
Breakeven sales | 160,000 | |
Multiple by: | Contribution Margin Ratio | 36% |
Fixed expense | 57,600 | |
Fixed expense | 57,600 | |
Add: | Profit earned | 28,800 |
Total contribution | 86,400 | |
Divided by: | Contribution Margin ratio | 36% |
Sales for the year | 240,000 | |
Sales | 240,000 | |
Less: | Total contribution | 86,400 |
Variable expense | 153,600 | |
Sales | 240,000 | |
Less: | Breakeven sales | 160,000 |
Margin of safety in dollars | 80,000 | |
Divided by: | Sales | 240,000 |
Margin of safety ratio | 33.333333% |