Break-Even Point:A break-even point is the number of units or amount of dollar where a company is neither making profit nor incurring any loss.
Margin of safety:It is a zone where a company is making profit from the operation and safe from incurring any losses.
1. The preparation of contribution statement income statement; one showing present operations and one showing proposed new operations.
2. Based on the income statement for the present operations and the proposed new operations, compute:
a) The degree of operating leverage
b) The break-even point in dollar sales
c) The margin of safety in dollar and in percentage.
3. The factor in deciding whether to purchase the new equipment
4. The break-even point in dollar sales under the new marketing strategy and mention your agreement with the marketing proposal.

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Chapter 5 Solutions
MANAGERIAL ACCOUNTING-W/ACCESS >C<
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