Suppose you purchase five put contracts on Testaburger Co. The strike price is $45, and the premium is $3. If, at expiration, th
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A lot of information is missing as well as the requirements, so I looked for similar questions.
The requirements are:
<em>a. What is the break-even point in sales dollars for RBC? </em>
<em>b. What is the margin of safety for RBC? </em>
<em>c. What sales dollars would be required to achieve an operating profit of $250.000? $490.000?</em>
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a) break even point = total fixed costs / contribution margin
- total fixed costs = $1,125,430
- contribution margin = $1,427,642 / $1,953,000 = 73%
break even point = $1,124,430 / 73% = $1,540,315
b) margin of safety = current sales - break even point = $1,953,000 - $1,540,315 = $412,685
c) operating profit = $250,000 ⇒ ($1,125,430 + $250,000) / 73% = $1,884,150.69
operating profit = $490,000 ⇒ ($1,125,430 + $490,000) / 73% = $2,212,917.81
