variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the following information for his most recent year. Cost of goods sold represents the cost paid for the merchandise he sells, while operating costs represent rent, insurance, and salaries, which are entirely fixed. Sales $650,000 422,500 227,500 Cost of merchandise sold Contribution margin Operating costs Operating profit 105,000 $122,500 Required 1. What is Harold's margin of safety (MOS) in dollars? What is the margin of safety (MOS) ratio? 2. Of what managerial significance are the measures calculated in requirement 1? 3. What is Harold's margin of safety (in dollars) and operating profit if sales should fall to $500,000?
variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the following information for his most recent year. Cost of goods sold represents the cost paid for the merchandise he sells, while operating costs represent rent, insurance, and salaries, which are entirely fixed. Sales $650,000 422,500 227,500 Cost of merchandise sold Contribution margin Operating costs Operating profit 105,000 $122,500 Required 1. What is Harold's margin of safety (MOS) in dollars? What is the margin of safety (MOS) ratio? 2. Of what managerial significance are the measures calculated in requirement 1? 3. What is Harold's margin of safety (in dollars) and operating profit if sales should fall to $500,000?
Accounting Information Systems
11th Edition
ISBN:9781337552127
Author:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Publisher:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Chapter17: Acquiring And Implementing Accounting Information Systems
Section: Chapter Questions
Problem 5P: TM Office Supplies, Inc., is a wholesale distributor of office supplies. It sells pencils and pens,...
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