How do they calculate this?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Year 1 Sales revenue: 400 cost: 464 Result: -64 Year 2
Sales revenue: 800 Cost: 704 Result: 96 The structure of costs in relation to sales has remained the same in both years. Calculate the company's profit margin %. critical point and margin of safety for years 1 and 2. And here is the answer: Margin % 40 Critical point 560 Margin % and critical point are the same in years I and II Safety margin in year I -160 Safety margin in year II 24. How do they calculate this?
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