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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 $6,630,000 and a 45% contribution margin. Its fixed costs are $1,790,100. 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:

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 $6,630,000 and a 45% contribution margin. Its fixed costs are $1,790,100. 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:

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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 $6,630,000 and a 45% contribution margin. Its fixed costs are $1,790,100. 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 its margin of safety is $2,652,000 whereas Jakarta's is $180,000. b. Maldives is stronger because its margin of safety is $180,000 whereas Jakarta's is $2,652,000. c. Jakarta is stronger because its margin of safety is $2,652,000 whereas Maldives's is $180,000. d. Jakarta is stronger because its margin of safety is $180,000 whereas Maldives's is $2,652,000. C. Compare the margin of safety in percentage between the two companies. Now, which one is stronger? a. Maldives is stronger because its % margin of safety is 40.0% whereas Jakarta's is 60%. b. Maldives is stronger because its % margin of safety is 50% whereas Jakarta's is 40.0%. c. Jakarta is stronger because its % margin of safety is 40.0% whereas Maldives's is 60%. d. Jakarta is stronger because its % margin of safe 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 Compare the degree of operating leverage for both companies. Which company will benefit most from a 15% 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 $6,630,000 and a 45% contribution margin. Its fixed costs are $1,790,100. 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 its margin of safety is $2,652,000 whereas Jakarta's is $180,000. b. Maldives is stronger because its margin of safety is $180,000 whereas Jakarta's is $2,652,000. c. Jakarta is stronger because its margin of safety is $2,652,000 whereas Maldives's is $180,000. d. Jakarta is stronger because its margin of safety is $180,000 whereas Maldives's is $2,652,000. C. Compare the margin of safety in percentage between the two companies. Now, which one is stronger? a. Maldives is stronger because its % margin of safety is 40.0% whereas Jakarta's is 60%. b. Maldives is stronger because its % margin of safety is 50% whereas Jakarta's is 40.0%. c. Jakarta is stronger because its % margin of safety is 40.0% whereas Maldives's is 60%. d. Jakarta is stronger because its % margin of safe 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 Compare the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales?
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