1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
LenKa [72]
3 years ago
5

Chillmax Company had planned to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes di

rect materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 3,500 units sold is $58,500. The degree of operating leverage is 2.3. Now Chillmax expects to increase sales by 10% next year.
Required:1. Calculate the margin of safety in terms of the number of units.2. Calculate the margin of safety in terms of sales revenue.
Business
1 answer:
Tema [17]3 years ago
8 0

Answer:

Margin of safety (units)= 1,500 units

Margin of safety (dollars)= $90,000

Explanation:

Giving the following information:

Sales= 3,500 units

Selling price= $60

Unitary variable cost= $21

Total fixed cost equals $78,000

First, we need to calculate the break-even point both in units and dollars:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 78,000/ (60 - 21)

Break-even point in units= 2,000 units

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 78,000/ (39/60)

Break-even point (dollars)= $120,000

Now, we can determine the margin of safety:

Margin of safety= (current sales level - break-even point)

Margin of safety (units)= 3,500  - 2,000= 1,500 units

Margin of safety (dollars)= 210,000 - 120,000= $90,000

You might be interested in
To an economist, an increase in demand means the same thing as an increase in quantity demanded.
Morgarella [4.7K]
<span>This is false. An increase in demand is more major than an increase in quantity demanded. Quantity demand refers to the demand of a product at a particular price and is only a movement on the demand curve. An increase in demand would cause the demand curve to shift which is more major than a movement and it encompasses the entire relationship between price and demand.</span>
7 0
3 years ago
For an average commercial vehicle being driven at 55 mph on dry pavement, it will take about _____ to bring the vehicle to a sto
zalisa [80]
Answer: 300 feet

Explanation:
Three important factors are involved in bringing a moving vehicle to a stop.

1. Perception distance is the distance a vehicle travels while your brain perceives the need to apply the brakes. An alert driver requires about 0.75 seconds to react. This time accounts for about 60 feet of travel.

2. Reaction distance is the distance traveled before the driver actually presses on the brake pedal. For an alert driver, this also takes about 0.75 seconds. This adds another 60 feet of travel.

3. Braking distance is the distance the vehicle travels before coming to a stop on a dry ground. On a slippery ground (after snow or rain) this distance is longer. On dry ground, the skidding distance is about 170 feet.

This means that an alert driver needs 60+60+170 = 290 feet (approximately 300 feet) to stop.
For this reason, tailgating at high driving speeds is dangerous.

7 0
3 years ago
Give an example of how businesses use demographic information ECONOMICS
trapecia [35]

Businesses often segment the market based on key demographics such as age, gender, income level or marital status, but they also use more precisely defined categories to target specific groups.

3 0
3 years ago
Suppose that an income producing property is expected to yield cash flows for the owner of $150,000 in each of the next five yea
vivado [14]

Answer:

$1,449,635.50  

Explanation:

The computation of the value of the property today is shown below:

First the present value for 5 years is

Year Cash flows    Discount factor      Present value

1 $150,000  0.925925926 $138,888.89  

2 $150,000  0.85733882         $128,600.82  

3 $150,000  0.793832241         $119,074.84  

4 $150,000  0.735029853         $110,254.48  

5 $150,000  0.680583197          $102,087.48  

Total present value            $598,906.51  

The discount factor is

= 1 ÷ (1 + rate)^years  

And, the formula of future value is

Future value = Present value × (1 + rate)^number of years

$1,250,000 = Present value × (1 + 0.08)^5

$1,250,000 = Present value × 1.469328077

So, the present value is $850,729

Now the today value of the property is

= $598,906.51 + $850,729

= $1,449,635.50  

7 0
3 years ago
Consider a portfolio comprised of four risky securities. Assume the economy has three states with varying probabilities of occur
olga nikolaevna [1]

Answer:

B. The portfolio expected rate of return must be the same for each economic state.

Explanation:

Variance formula = sum of (probability x (r - mean)^2)

r= expected return

if the expected return would be same for each economic state then the mean would equal to expected return which ultimately will give variance zero ( as r-mean would be 0).

Hence the correct option is B. The portfolio expected rate of return must be the same for each economic state.

8 0
3 years ago
Other questions:
  • The concept of an "artificial being: refers to which form of business organization?
    10·1 answer
  • Hardy lumber has a capital structure that includes bonds, preferred stock, and common stock. which one of the following rights i
    5·1 answer
  • An interactive, Internet-enabled system that allows individual customers to design their own products by answering a few questio
    7·1 answer
  • You are analyzing a stock that has a beta of 1.25. The​ risk-free rate is 3.7 % and you estimate the market risk premium to be 5
    14·1 answer
  • Derrick delivers messages on his bike all over the busy, hilly streets of downtown san francisco. he is engaging in which type o
    14·1 answer
  • Which of the following is an example of comparative advantage​? A. Michael Jordan is an American basketball player. B. The Unite
    12·1 answer
  • A reversionary interest would be held by a:
    12·1 answer
  • How do i get my grade higher.60-80 and 70-80
    10·2 answers
  • The Fed threw a lot of money at the financial crisis in 2008 to unfreeze credit markets and encourage economic activity. As part
    8·1 answer
  • 11. The auditor's report may include which of the following elements?
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!