he sales and cost data for two companies in the transportation industry are as follows: X...
he sales and cost data for two companies in the transportation industry are as follows:
| X Company | Y Company | ||||||||||||
| Amount | Percent | Amount | Percent | ||||||||||
| Sales | $ | 120,000 | 100 | $ | 120,000 | 100 | |||||||
| Variable costs | 72,000 | 60 | 36,000 | 30 | |||||||||
| Contribution margin | 48,000 | 40 | 84,000 | 70 | |||||||||
| Fixed costs | 36,000 | 72,000 | |||||||||||
| Operating income (πB) | $ | 12,000 | $ | 12,000 | |||||||||
Y Company's margin of safety (MOS) in sales dollars (rounded) is:
Homework Answers
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Calculation of Y's Comapny Margin of safety in sales dollars is as follows: |
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|
Formula: |
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Margin of Safety in dollars= Profit/ Profit Volume Ratio |
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As given in question: |
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For Company Y |
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Particulars |
"Amount (in dollars)" |
|
Sales |
120000 |
|
(-) Variable expenses |
36000 |
|
Contribution |
84000 |
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(-) Fixed Expenses |
72000 |
|
Profit i.e Net Income |
12000 |
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Calculation of Contribution to sales ratio i.e Profit Volume Ratio : |
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Formaula: |
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Contribution to sales ratio i.e Profit Volume Ratio= |
(Contribution/ Sales )*100 |
|
(In percentage) |
=(84000/120000)*100 |
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70.00% |
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Hence, Margin of safety in dollars= |
12000/70% |
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17142.85714 |
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Hence Margin of Safety in sales dollars for Compnay Y (rounded off) is 17143 |
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Add Answer to:
he sales and cost data for two companies in the transportation
industry are as follows:
X...
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