Break-Even Point: A break-even point is the point where a company is neither making profit nor incurring any loss. Margin of Safety: A margin of safety is the zone between the budgeted sales and the break even sales. 1. a) Preparation of contribution format income statement. b) The break-even point in dollar sales, margin of safety in dollar and its percentage. 2. a) Preparation of revised contribution format income statement. b) The revised break-even point in dollar sales, margin of safety in dollar and its percentage. 3. Explanation of results.

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Chapter 5, Problem 27P

To determine

Break-Even Point:A break-even point is the point where a company is neither making profit nor incurring any loss.

Margin of Safety:A margin of safety is the zone between the budgeted sales and the break even sales.

1. a) Preparation of contribution format income statement.

b) The break-even point in dollar sales, margin of safety in dollar and its percentage.

2. a) Preparation of revised contribution format income statement.

b) The revised break-even point in dollar sales, margin of safety in dollar and its percentage.

3. Explanation of results.

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