How many statements below regarding margin of safety are correct? 1. It is the amount by which sales can be reduced without incurring a loss. 2. It is the difference between budgeted sales and breakeven sales. 3. It can be expressed in terms of unit, pesos or percentage of sales. 4. Its presence indicates that the company expects profit. 5. The product of margin of safety units and unit contribution margin is the projected profit for the period. 6. The higher the margin of safety, the lower is the risk of incurring operating loss.

Q: Which of the following is true regarding the contribution margin ratio of a single product company?…

A: 1. Contribution Margin Ratio - It is calculated by following formula - = (Total Revenue - Variable…

Q: If the margin of safety for Beartooth Company was 15%, fixed costs were $9,180,000, and variable…

A: Contribution margin ratio = 100 - variable costs % = 100 - 60 = 40%

Q: How many statements below regarding margin of safety are correct? 1. It is the amount by which sales…

A: Margin of safety means the difference between the budget sales and breakeven sales. It means the…

Q: A manufacturing company prepares income statements using both absorption and variable costing…

A: Gross profit = Sales revenues - Cost of goods sold Contribution margin = Sales - Variable cost   If…

Q: Using the following data, estimate the new Return on Investment if there is a 7% decrease in…

A: When a company has invested some amount of capital into the business with an intention to earn…

Q: To calculate the sales dollars necessary to achieved a desired profit level, the sum of fixed costs…

A: The break even sales are the sales where business earns no profit no loss during the period.

Q: Which of the following statements about margin of safety is false? O a. If the variable cost per…

A: If Fixed cost decreases remaining constant Break even sales automatically Break even sales reduces…

Q: Once a company exceeds its breakeven level, operating income can be calculated by multiplying: The…

A: Break-even point:

Q: If both the fixed costs associated with a product and the variable costs (as apercentage of sales…

A: Cost: It can be defined as the total amount that is spent by a business in manufacturing a product.

Q: A manufacturing company prepares income statements using both absorption and variable costing…

A: The net income is contributed as difference between gross profit and selling expenses or difference…

Q: Complete the following problems using the following ratios:…

A: Break even point is sales at which the operating income is zero that means fixed cost and variable…

Q: Which of the following statements about margin of safety is false? O a. If the variable cost per…

A: Margin of safety is calculated as excess of current sales revenue over break even sales.

Q: Compute the contribution margin Using the projected sales for the coming year, compute the margin of…

A: Contribution margin ratio  It is calculated by substraction of variable cost from total sales and…

Q: ) Briefly explain the impact of each of the following scenarios on the break-even point and the…

A: Break even point is the point of sales where business earns no profit no loss.

Q: Calculate the break even number of units if the fixed expenses are $7,000 and the contribution…

A: Given, Fixed expenses = $7000 Contribution margin per unit = $14

Q: eases its selling price by 15%?” Discuss the following under CVP analysis (present graphical…

A: a) Hello thank you for the question. As per guidelines, we would provide only one answer at a time.…

Q: Contribution Margin, Break-Even Sales, A chart used to assist management in understanding the…

A: Hey, since there are multiple requirements posted, we will answer the first three requirements. If…

Q: From the following particulars you are required to calculate (a) P I V ratio and (b) Break-even…

A:

Q: Help question 28

A: Operating leverage: It is a financial ratio that measures a company’s operating income to its sales…

Q: ?Which of the following statements about margin of safety is false .Margin of safety measures the…

A: The MOS is the difference between the budgeted sales or actual sales and the break-even sales. It…

Q: The ratio of contribution margin in dollars to the selling price is the: Select one: Oprofit margin.…

A: We know that,  Contribution is sales - variable cost

Q: 1. Compute Hudson Co.'s contribution margin per unit. 2. Compute Hudson Co's contribution margin…

A: Forecasted Contribution Margin Income Statement Particulars Units   Amounts Sales 11,000 225…

Q: Margin of safety ratio is computed by dividing excess of actual or budgeted sales from break- even…

A: Margin of safety ratio = Profit ratio / Contribution margin ratio

Q: Which of the following is true regarding the contribution margin ratio of a company that produces…

A: Contribution margin is one of the important terms under the Cost Volume Profit analysis.Contribution…

Q: Which of the following statements about margin of safety is false? If the variable cost per unit…

A: Margin of safety can be referred to as the difference between the break even sales and the expected…

Q: The margin of safety: (A) equals break-even unit sales less actual unit sales (B) shows how far…

A: Margin of safety= Total sales- Breakeven sales

Q: Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The controller of Ashton…

A: Contribution Margin Ratio = 26400/ 88000   .                                            = 0.3 : 1 or…

Q: Compute the break-even point in sales dollars for the company as a whole and the margin of safety in…

A: Break-even point refers to a point at which the company earns neither profit nor deficit. If the…

Q: The use of fixed costs to extract higher percentage changes in profits as sales activity changes…

A: SOLUTION- DEGREE OF OPERATING LEVERAGE CALCULATES THE PROPORTIONAL CHANGE IN OPERATING INCOME THAT…

Q: If total fixed costs decreases while the sale price per unit and the variable costs per unit remain…

A: CONTRIBUTION PER UNIT = SALE PRICE - VARIABLE COST PER UNIT  BREAKEVEN POINT = FIXED COST /…

Q: Sometimes management prefers that the break-even point be expressed in sales dollars rather than…

A: Break-even Point - It is a point at which revenues of a company are equal to the total expense of a…

Q: 2. What is the expected contribution margin ratio? Round to the nearest whole percent. 3. Determine…

A: Formula used: Break-even sales (units) = Fixed cost/ Contribution per unit Break-even sales…

Q: Once a company exceeds its breakeven level, operating income can be calculated by multiplying: a.…

A: Break-Even Point: It is the point of sales at which entity neither earns a profit nor suffers a…

Q: Required: 1.  Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the…

A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get…

Q: Which of the following is true regarding the contribution margin ratio of a single product company?

A: Contribution Margin: It is defined as the difference between the sales and the variable cost.…

Q: Which of the following statements about CVP analysis is false? O a. Operating income calculations in…

A: CVP analysis estimates the how much the changes in a company's cost, both fixed and variable, sales…

Q: Complete the following problems using the following ratios:…

A: Break Even Point is the point where firms earns "No Profit & No Loss". This is the point where…

Q: a.Explain why contribution margin per unit becomes profit per unit above the break-even point b. If…

A: Let us first understand what is break even point and contribution margin Break even point is a…

Q: The measure that reflects an organization's variable and fixed cost relationship and indicates how a…

A: Break even point (BEP): Breakeven is the point where total expenses are equal to total revenue. at…

Q: Contribution margin analysis focuses on explaining the differences between planned and actual…

A: Contribution margin: Contribution margin is computed after deducting variable costs from revenues.…

Q: Which of the following is true regarding the contribution margin ratio of a company that produces…

A: Contribution margin ratio=Contribution per unitSales price per unit Contribution per unit = Sales…

Q: The margin of safety can be defined as the excess of budgeted sales over:  break-even sales. net…

A: Cost-volume profit analysis: It can be defined as a cost accounting method that shows the impact of…

Q: You have been provided with the following information:   Total Sales $ 90,000 Less Variable…

A: Fixed costs refers to the cost that remains unchanged and is uncontrollable in the hands of…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.