Question 3 The following monthly data in contribution format are available for the Timor Company and its only product. Product SD: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ $ $ $ $ 227,500 162.500 65,000 45.000 20,000 Per Unit $ $ $ 91 65 26 The company produced and sold 2,500 units during the month and had no beginning or ending inventories. a) What is the current margin of safety? b) Management is concerned about having the funds to pay dividends next quarter. They believe net operating income of $35,000 will be sufficient. How much sales revenue is necessary to achieve this target profit?
Question 3 The following monthly data in contribution format are available for the Timor Company and its only product. Product SD: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ $ $ $ $ 227,500 162.500 65,000 45.000 20,000 Per Unit $ $ $ 91 65 26 The company produced and sold 2,500 units during the month and had no beginning or ending inventories. a) What is the current margin of safety? b) Management is concerned about having the funds to pay dividends next quarter. They believe net operating income of $35,000 will be sufficient. How much sales revenue is necessary to achieve this target profit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 3
The following monthly data in contribution format are available for the Timor Company and its only product.
Product SD:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Total
$
$
$
$
$
227,500
162.500
65,000
45.000
20,000
Per Unit
$
$
$
91
65
26
The company produced and sold 2,500 units during the month and had no beginning or ending inventories.
a) What is the current margin of safety?
b) Management is concerned about having the funds to pay dividends next quarter. They believe net
operating income of $35,000 will be sufficient. How much sales revenue is necessary to achieve this target
profit?
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