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Jak Company is a service firm with current service revenue of $300,000 and a 30% contribution margin. Its feed costs are $30,000. Ralaves company has current sales of $6,050,000 and a 456 contribution margin. Bished costs are $1,700 A. What is the margin of safety for Jakarta and Maldives? If required, round final answers to one decimal place. Margin of safety for Jakarta Margin of safety for Maldives B. Compare the margin of safety in dollars between the two companies. Which is stronger? a. Maldives is stronger because Rs margin of safety is $2,000,000 whereas Jakarta's is $180,000. b. Maldives is stronger because Rs margin of safety is $180,000 whereas Jakarta's is $2,000,000. c. Jakartais stronger because its margin of safety is $2,000,000 whereas Maldives's is $180,000. d. Jakartais stronger because its margin of safety is $180,000 whereas Maldives's is $2,000,000. C. Compare the margin of safety in percentage between the two companies. Now, which one is stronger? a. Maldives is stronger because ts to margin of safety is 40.0% whereas Jakarta's is 60%. b. Maldives is stronger because Jakartais stronger because its d. Jakartais stronger because its to margin of safety is 30% whereas Jakarta's is 40.0%. margin of safety is 40.0% whereas Maldives's in 60. margin of safety is 60% whereas Maldives's is 40.0% D. Compute the degree of operating leverage for both companies. If required, round final answers to two decimal places. Operating leverage: Maldives

Jak Company is a service firm with current service revenue of $300,000 and a 30% contribution margin. Its feed costs are $30,000. Ralaves company has current sales of $6,050,000 and a 456 contribution margin. Bished costs are $1,700 A. What is the margin of safety for Jakarta and Maldives? If required, round final answers to one decimal place. Margin of safety for Jakarta Margin of safety for Maldives B. Compare the margin of safety in dollars between the two companies. Which is stronger? a. Maldives is stronger because Rs margin of safety is $2,000,000 whereas Jakarta's is $180,000. b. Maldives is stronger because Rs margin of safety is $180,000 whereas Jakarta's is $2,000,000. c. Jakartais stronger because its margin of safety is $2,000,000 whereas Maldives's is $180,000. d. Jakartais stronger because its margin of safety is $180,000 whereas Maldives's is $2,000,000. C. Compare the margin of safety in percentage between the two companies. Now, which one is stronger? a. Maldives is stronger because ts to margin of safety is 40.0% whereas Jakarta's is 60%. b. Maldives is stronger because Jakartais stronger because its d. Jakartais stronger because its to margin of safety is 30% whereas Jakarta's is 40.0%. margin of safety is 40.0% whereas Maldives's in 60. margin of safety is 60% whereas Maldives's is 40.0% D. Compute the degree of operating leverage for both companies. If required, round final answers to two decimal places. Operating leverage: Maldives

FINANCIAL ACCOUNTING
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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Jakarta Company is a service firm with current service revenue of $300,000 and a 30% contribution margin. Its fixed costs are $36,000. Maldives Company has current sales of $6,550,000 and a 45% contribution margin. Its fixed costs are $1,795,500. A. What is the margin of safety for Jakarta and Maldives? If required, round final answers to one decimal place. Margin of safety for Jakarta: Margin of safety for Maldives: X% B. Compare the margin of safety in dollars between the two companies. Which is stronger? a. Maldives is stronger because its margin of safety is $2,600,000 whereas Jakarta's is $180,000. b. Maldives is stronger because its margin of safety is $180,000 whereas Jakarta's is $2,660,000. c. Jakarta is stronger because its margin of safety is $2,550,000 whereas Maldives's is $180,000. d. Jakarta is stronger because its margin of safety is $180,000 whereas Maldives's is $2,660,000. C. Compare the margin of safety in percentage between the two companies. Now, which one is stronger? a. Maldives is stronger because its to margin of safety is 40.0% whereas Jakarta's is 60%. b. Maldives is stronger because its to margin of safety is 50% whereas Jakarta's is 40.0%. X% c. Jakarta is stronger because its % margin of safety is 40.0% whereas Maldives's is 50%. d. Jakarta is stronger because its margin of safety is 60% whereas Maldives's is 40.0% D. Compute the degree of operating leverage for both companies. If required, round final answers to two decimal places. Operating leverage: Jakarta Maldives X X Compare the degree of operating leverage for both companies. Which company will benefit most from a 20% increase in sales? a. Operating leverage for Jakartais 1.57; for Maldives it is 2.50. Maldives will benefit most from an increase in sales. b. Operating leverage for Jakarta is 1.67; for Maldives it is 2.50. Jakarta will benefit most from an increase in sales. c. Operating leverage for Jakarta is 2.50; for Maldives it is 1.67. Maldives will benefit most from an increase in sales. d. Operating leverage for Jakarta is 2.50; for Michelle it is 1.57. Jakarta will benefit most from an increase in sales.
Transcribed Image Text:Jakarta Company is a service firm with current service revenue of $300,000 and a 30% contribution margin. Its fixed costs are $36,000. Maldives Company has current sales of $6,550,000 and a 45% contribution margin. Its fixed costs are $1,795,500. A. What is the margin of safety for Jakarta and Maldives? If required, round final answers to one decimal place. Margin of safety for Jakarta: Margin of safety for Maldives: X% B. Compare the margin of safety in dollars between the two companies. Which is stronger? a. Maldives is stronger because its margin of safety is $2,600,000 whereas Jakarta's is $180,000. b. Maldives is stronger because its margin of safety is $180,000 whereas Jakarta's is $2,660,000. c. Jakarta is stronger because its margin of safety is $2,550,000 whereas Maldives's is $180,000. d. Jakarta is stronger because its margin of safety is $180,000 whereas Maldives's is $2,660,000. C. Compare the margin of safety in percentage between the two companies. Now, which one is stronger? a. Maldives is stronger because its to margin of safety is 40.0% whereas Jakarta's is 60%. b. Maldives is stronger because its to margin of safety is 50% whereas Jakarta's is 40.0%. X% c. Jakarta is stronger because its % margin of safety is 40.0% whereas Maldives's is 50%. d. Jakarta is stronger because its margin of safety is 60% whereas Maldives's is 40.0% D. Compute the degree of operating leverage for both companies. If required, round final answers to two decimal places. Operating leverage: Jakarta Maldives X X Compare the degree of operating leverage for both companies. Which company will benefit most from a 20% increase in sales? a. Operating leverage for Jakartais 1.57; for Maldives it is 2.50. Maldives will benefit most from an increase in sales. b. Operating leverage for Jakarta is 1.67; for Maldives it is 2.50. Jakarta will benefit most from an increase in sales. c. Operating leverage for Jakarta is 2.50; for Maldives it is 1.67. Maldives will benefit most from an increase in sales. d. Operating leverage for Jakarta is 2.50; for Michelle it is 1.57. Jakarta will benefit most from an increase in sales.
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Break even point is the point where there is no profit or loss . At this point the contribution margin equals the fixed cost . Earning earned beyond this point is the margin of safety.

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