CVP analysis, margin of safety. Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000.Required:Compute the contribution margin percentage.Compute the selling price if variable costs are $16 per unit.Suppose 75,000 units are sold. Compute the margin of safety in units and dollars.What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?

1.Compute the contribution margin percentage.Contribution margin percentage = Fixed costs / Break…

Answered: CVP analysis, margin of safety. Suppose…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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CVP analysis, margin of safety. Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000.

Required:

Compute the contribution margin percentage.
Compute the selling price if variable costs are $16 per unit.
Suppose 75,000 units are sold. Compute the margin of safety in units and dollars.
What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?

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