The sales and cost data for two companies in the transportation industry are as follows: X...

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Answer 1

Answer #1

Ans.a	Break-even revenue = Fixed cost / Contribution margin ratio
		36000 / 40%
		90000

Ans.b	Margin of safety (in %) = (Sales - Break even revenue) / Sales * 100
		(120000 - 90000) / 120000 * 100
		30000 / 120000 * 100
		25%

Ans.c	Degree of operating leverage = Contribution margin / Operating income
			48000 / 12000
			4

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Answer 2

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