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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.

Correct Answer:

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(a) $1,000,000 - $900,000 = $100,000
(b)...

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