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lara [203]
3 years ago
15

A company revealed the following figures: Sales revenue $2,240,000 Contribution margin $560,000 Net operating income $410,000 Ho

w much is the company's margin of safety in dollars
Business
1 answer:
Alexandra [31]3 years ago
3 0

Answer:

The company's margin of safety in dollars is $1,640,000 .

Explanation:

Margin of Safety is the amount in units or dollars by which sales may fall before a Company starts making a loss.

The first step is to calculate break even point  in dollar sales.

Break even point  in  dollar sales = Fixed Costs / Contribution Margin Ratio

Where,

Fixed Costs = Contribution margin - Operating Income

                    = $560,000 - $410,000

                    = $150,000

Contribution Margin Ratio = Contribution margin ÷ Sales revenue

                                           = $560,000 ÷ $2,240,000

                                           = 0.25

Thus,

Break even point  in  dollar sales = $150,000 / 0.25

                                                       = $600,000

Margin of Safety = Expect Sales - Break Even Sales

                            = $2,240,000 - $600,000

                            = $1,640,000

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A company produces 11,900 units of which 200 are spoiled units because the​ process, even though carefully and efficiently execu
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Answer:

Normal spoilage rate = 1.6978% (Approx)

Explanation:

Given:

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In the current year, Borden Corporation had sales of $2,190,000 and cost of goods sold of $1,295,000. Borden expects returns in
NNADVOKAT [17]

Answer:

The entries are as follows

To record estimated returns on Sales

Debit: Sales Refund Payable Account $131,400

Credit: Accounts Receivables $131,400

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Credit: Inventory on Sales on Returns $77,700

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