Question

please show work/give explaination

DULU 9. Current sales revenue in dollars is $6,000. The price is $3 per unit, variable costs are $1 per unit, and total fixed costs are $1,000. Compute the margin of safety: A. not enough information need to know the breakeven point B. 8.33% C. 25% D. 75% E. 91.67% (3-1) 21000 2 1. At current sales revenue of $700, total variable costs are $560 and total fixed costs are $50. Your boss gave you a profit target of $150. How much do you need to sell in dollars to meet this target? A. not enough information need data on units B. $200 700 500 C. $250 D. $760 2x700-so E. $1,000 FC / CRM

Answer 1

9.

Selling price per unit = $3

Variable cost per unit = $1

Contribution margin per unit = Selling price per unit - Variable cost per unit

= 3-1

= $2

Contribution margin ratio = Contribution margin per unit/ Selling price per unit

= 2/3

= 66.67%

Fixed cost = $1,000

Break even sales (in dollars) = Fixed cost / Contribution margin ratio

= 1,000/66.67%

= $1,500

Margin of safety = Current sales - Break even sales

= 6,000-1,500

= $4,500

Margin of safety (%) = Margin of safety / Current sales

= 4,500/6,000

= 75%

Correct option is D.

10.

Sales = $700

Total variable cost = $560

Contribution margin = Sales - Total variable cost

= 700-560

= $140

Contribution margin ratio = Contribution margin / Sales

= 140/700

= 20%

Sales to get target profit = ( Fixed cost + Target profit)/ Contribution margin ratio

= (50+150)/20%

= $1,000

Correct option is E.

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks