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Elis [28]
3 years ago
13

Zhao Co. has fixed costs of $429,000. Its single product sells for $187 per unit, and variable costs are $122 per unit. If the c

ompany
expects sales of 10,000 units, compute its margin of safety in dollars and as a percent of expected sales.
Dollars
Percent
Margin of safety
Business
1 answer:
otez555 [7]3 years ago
4 0

Answer:

$635,000 and : 34%

Explanation:

Margins of safety is the difference between expected sales and the break-even point.

For Zhao, expected sales are 10,000 units

The break-even points in units = fixed cost/ contribution margin per unit

fixed costs = $429,000

Contribution margin per unit = selling price - variable costs per unit

=$187 -  $122

=$65

break-even point in units = $429,000/$65

break-even point = 6600 units

Margin of safety = 10,000 - 6600 units

=3400 units

In dollars is equal to margin of safety in units x selling price

=3400 x 187

<u>=$635,000</u>

as a percent of expected sales.

=3400/10000 x 100

=0.34 x 10,000

=34%

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Kijijo Auctions runs an online auction company. Its end-of-year financial statements indicate the following results. Total asset
katrin [286]

Answer:

40%

Explanation:

Total assets. $240,000

Less total liabilities ($130,000)

$110,000

Less common stock ($24,000)

Retained earnings at end $86,0000

Less Retained earnings at the beginning ($29,000)

Addition to retained earnings $57,000

Add dividends $6,400

Net profit earned $63,400

Add expenses $94,000

Revenue. $157,400

Therefore, company's net profit margin expressed as a percentage = Net profit earned / Revenue

= (63,400/157,400) × 100

= 40%

6 0
3 years ago
A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 200 units is $4
sattari [20]

Answer:

It must shut down

Explanation:

Even at the lower average variable cost, which is 3.50 dolllar will be lossing money given a market price of 3.00 dollar

Considering is not making enough to cover the variable cost the best option is to shut down and only take a hit for the fixed cost  until it can totally exit the market. If it tries to produce it will only make thinks worse as producing generates more losses

6 0
3 years ago
Prepare a multiple-step income statement for Armstrong Co. from the following data for the year ended December 31. Sales, $755,0
OLEGan [10]

Answer:

See explanation

Explanation:

                       Armstrong Co.

          Multi-step Income Statement

  For the year ended, December 31, 20YY

Sales                                              $755,000

<u>Less: Cost of merchandise sold   (330,000)</u>

Gross Profit                                                    $425,000

Less: Operating expenses

Administrative expenses  $35,000

Selling expenses               $50,000

<em><u>Total operating expenses                               $85,000</u></em>

Income from operation                                 $340,000

Other revenue and expenses:

Rent Revenue                    $25,000

interest expense               ($30,000)

<u>Total other revenues (expenses)                      $(5,000)</u>

Income before taxes                                      $335,000

<u>Less: Income Tax                                                     0</u>

Net Income (loss)                                           $335,000

That is the appropriate way to prepare a multi-step income statement

3 0
3 years ago
Alejandro has many business ideas that could satisfy the unfulfilled needs of people who live in his community. However, there a
WITCHER [35]

Answer:

economic and legal

Explanation:

Out of all the options, this option fits the scenario the most and I just took the test.

5 0
3 years ago
On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances:
amm1812

Answer:

January 2 Purchase rental space for one year in advance, $6,300 ($525/month).

Dr Prepaid expense 6,300

    Cr Cash 6,300

January 9 Purchase additional supplies on account, $3,600.

Dr Supplies 3,600

    Cr Accounts payable 3,600

January 13 Provide services to customers on account, $25,600.

Dr Accounts receivable 25,600

    Cr Service revenue 25,600

January 17 Receive cash in advance from customers for services to be provided in the future, $3,800.

Dr Cash 3,800

    Cr Unearned revenue 3,800

January 20 Pay cash for salaries, $11,600.

Dr Wages expense 11,600

    Cr Cash 11,600

January 22 Receive cash on accounts receivable, $24,200.

Dr Cash 24,200

    Cr Accounts receivable 24,200

January 29 Pay cash on accounts payable, $4,100.

Dr Accounts payable 4,100

    Cr Cash 4,100

<u>adjusting entries:</u>

Rent for the month of January has expired.

Dr Rent expense 525

    Cr Prepaid rent 525

Supplies remaining at the end of January total $3,500.

Dr Supplies expense 3,300

    Cr Supplies 3,300

6 0
3 years ago
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