Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit Margin of Safety: It is a measure that shows the probability of decrease in the sales level before a company faces an operating loss or reaches its break-even point. It is expressed in terms of dollars of sales, unit of sales, and percent of current sales. The formula to calculate the margin of safety as a percent of current sales is as follows: Margin of Safety = Sales − Sales at Break-Even Point Sales To explain: the reason to question the validity of the given data.
Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows: Break-even point in Sales ( units ) = Fixed Costs Contribution Margin per unit Margin of Safety: It is a measure that shows the probability of decrease in the sales level before a company faces an operating loss or reaches its break-even point. It is expressed in terms of dollars of sales, unit of sales, and percent of current sales. The formula to calculate the margin of safety as a percent of current sales is as follows: Margin of Safety = Sales − Sales at Break-Even Point Sales To explain: the reason to question the validity of the given data.
Solution Summary: The author explains that a company's break-even point is the probability of decrease in the sales level before it faces an operating loss. The data is invalid because there is no margin of safety.
Break-even Point: It refers to a point in the level of operations at which a company experiences its revenues generated is equal to its costs incurred. Thus, when a company reaches at its break-even point, it reports neither an income nor a loss from operations. The formula to calculate the break-even point in sales units is as follows:
Margin of Safety: It is a measure that shows the probability of decrease in the sales level before a company faces an operating loss or reaches its break-even point. It is expressed in terms of dollars of sales, unit of sales, and percent of current sales. The formula to calculate the margin of safety as a percent of current sales is as follows:
MarginofSafety=Sales−SalesatBreak-EvenPointSales
To explain: the reason to question the validity of the given data.
Musk Jewellers wants to apply a markup of 35% based on the selling price for a gold bracelet. If the store paid $4,160.00 for the bracelet, how much should it be sold for to achieve the desired markup? a. $6,400.00 b.$5,600.00 c. $4,800.00 d. $3,120.00
Havenwood Industries provides the following information
for the year:
Description
Sales Revenue
Amount
$400,000
Accounts Receivable $300,000
Ending Inventory
$250,000
Cost of Goods Sold
$220,000
Sales Returns
$60,000
Sales Discounts
$30,000
What is Havenwood Industries' gross profit?
a. $210.000
b. $90,000
c. $120,000
d. $150,000