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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

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