The section of Waterways that produces controllers for the company provided the following information.Sales for month of February 4,200Variable manufacturing cost per unit $10.00Sales price per unit $43.00Fixed manufacturing overhead cost (per month for controllers) $83,000Variable selling and administrative expenses per unit $2.90Fixed selling and administrative expenses (per month for controllers) $13,250Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the break-even point in dollars, and the margin of safety ratio for Waterways Corporation on this product.Contribution Margin Ratio (Round to 0 decimal places, e.g. 25%.) %Degree of Operating Leverage (Round to 2 decimal places, e.g. 5.25.) Break-even Point in Dollars $Margin of Safety Ratio (Round to 1 decimal place, e.g. 5.2%.) %

Cost volume profit analysis is the technique used by the management for decision-making. The methods…

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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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The section of Waterways that produces controllers for the company provided the following information.

Sales for month of February		4,200
Variable manufacturing cost per unit		$10.00
Sales price per unit		$43.00
Fixed manufacturing overhead cost (per month for controllers)		$83,000
Variable selling and administrative expenses per unit		$2.90
Fixed selling and administrative expenses (per month for controllers)		$13,250

Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the break-even point in dollars, and the margin of safety ratio for Waterways Corporation on this product.

Contribution Margin Ratio *(Round to 0 decimal places, e.g. 25%.)*			%
Degree of Operating Leverage *(Round to 2 decimal places, e.g. 5.25.)*
Break-even Point in Dollars			$
Margin of Safety Ratio *(Round to 1 decimal place, e.g. 5.2%.)*			%

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