Requirements: a. Compute break-even point in units using the mathematical equation. b. Compute break-even point in sales rials using the contribution margin (CM) ratio. c. Compute the margin of safety percentage assuming actual sales are OMR 500,000.
Requirements: a. Compute break-even point in units using the mathematical equation. b. Compute break-even point in sales rials using the contribution margin (CM) ratio. c. Compute the margin of safety percentage assuming actual sales are OMR 500,000.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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Transcribed Image Text:ABC Company has the following data for the month of May 2019:
Cost Schedules
Variable costs
Direct labor per unit
OMR 5.00
Direct materials
3.00
Variable overhead
1.00
Variable cost per unit
9.00
Fixed costs
Manufacturing
OMR 110,500
Marketing
64,000
Administrative
45,500
Total fixed costs
220,000
Selling price per unit
OMR 20
Requirements:
a. Compute break-even point in units using the mathematical equation.
b. Compute break-even point in sales rials using the contribution margin (CM) ratio.
c. Compute the margin of safety percentage assuming actual sales are OMR 500,000.
d. Compute the sales required in rials to eam net income of OMR 165,000.
e. Compute the sales required in rials to ean net income of OMR 165,000 if the variable cost
per unit has increased to 11 OMR and total fixed cost has increased to 250,000.
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