2 Margin of safetya. If Kirwan Company, with a break-even point at $338,100 of sales, has actual sales of $490,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?1. $2.%b. If the margin of safety for Kirwan Company was 20%, fixed costs were $996,800, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even insales dollars first.)$

The break even sales are calculated as fixed costs divided by contribution Margin Ratio. The margin…

Answered: Margin of safety a. If Kirwan Company,…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 23E

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Margin of safety Jorgensen Company has sales of 380,000,000, and the break-even point in sales dollars is 323,000,000. Determine Jorgensen Companys margin of safety as a percent of current sales.
Faldo Company produces a single product. The projected income statement for the coming year, based on sales of 200,000 units, is as follows: Required: 1. Compute the unit contribution margin and the units that must be sold to break even. Suppose that 30,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the break-even point in dollars. Suppose that revenues are 200,000 greater than expected. What would the total profit be? 3. Compute the margin of safety in sales revenue. 4. Compute the operating leverage. Compute the new profit level if sales are 20 percent higher than expected. 5. How many units must be sold to earn a profit equal to 10 percent of sales? 6. Assume the income tax rate is 40 percent. How many units must be sold to earn an after-tax profit of 180,000?
High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved. Transportation Costs Gross-Ton Miles January $846,300 356,000 February 943,600 398,000 March 666,900 258,000 April 904,700 385,000 May 758,800 310,000 June 972,800 419,000 Determine the variable cost per gross-ton mile and the fixed cost. Variable cost (Round to two decimal places.) 2$ per gross-ton mile Total fixed cost
a. If Kirwan Company, with a break-even point at $459,900 of sales, has actual sales of $730,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?1. fill in the blank 1 of 2$2. fill in the blank 2 of 2% b. If the margin of safety for Kirwan Company was 20%, fixed costs were $1,203,200, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)fill in the blank 1 of 1$
a. If Canace Company, with a break-even point at $661,200o of sales, has actual sales of $870,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. 208,800 V 2. 24 b. If the margin of safety for Canace Company was 35%, fixed costs were $1,845,025, and variable costs were 65% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)
a. If Canace Company, with a break-even point at $671,500 of sales, has actual sales of $850,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. b. If the margin of safety for Canace Company was 30%, fixed costs were $1,436,400, and variable costs were 70% of sales, what was the amount of actual sales (dollars)?(Hint: Determine the break-even in sales dollars first.)
a. If Kirwan Company, with a break-even point at $2,080,000 of sales, has actual sales of $3,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? 1. $ 2. % b. If the margin of safety for Kirwan Company was 25%, fixed costs were $1,500,000, and variable costs were 60% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $
Margin of Safety a. If Del Rosario Company, with a break-even point at $455,000 of sales, has actual sales of $650,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. 2. % b. If the margin of safety for Del Rosario Company was 25%, fixed costs were $1,080,000, and variable costs were 75% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)
a. If Canace Company, with a break-even point at $372,600 of sales, has actual sales of $460,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $fill in the blank 1 2. fill in the blank 2% b. If the margin of safety for Canace Company was 20%, fixed costs were $1,305,600, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)$fill in the blank 3
a. If Canace Company, with a break-even point at $244,200 of sales, has actual sales of $370,000, what is the margin of safety evpressed (1) in doilars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2.
Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Q1. Compute the contribution margin percentage. Q2. Compute the selling price if variable costs are $16 per unit. Q3. Suppose 75,000 units are sold. Compute the margin of safety in units and dollars. Q4. What does this tell you about the risk of Morrison making a loss? What are the most likely reasons for this risk to increase?
I. What is the break- even point in dollar sales? J. How many units must be sold to achieve a target profit of $7,500? K. What is the margin of safety in dollars? What is the margin of safety percentage ? L. What is the degree of operating leverage?

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