HomeworkLib
Question

Which of the following would explain why the margin of safety in dollars increased even though...

Which of the following would explain why the margin of safety in dollars increased even though total sales dollars did not change? '

A) The breakeven point increased

B) Fixed costs increased

C) The variable cost per unit increased

D) The sales price per unit increased

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer

--Margin of Safety = Sales dollars - Break even sales.

--If Sales dollar has not increased, the increase in Margin of Safety would be due to decrease in Break even sales.
--Now, Break even sales decreases due to:
#1 Decrease in Fixed Cost, OR
#2 increase in contribution margin which happens due to either increase in sales price or decrease in variable cost.

--Hence, correct answer = Option 'D' The sales Price per unit has increased.

0 0
Add a comment
Know the answer?
Add Answer to:
Which of the following would explain why the margin of safety in dollars increased even though...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Determine contribution margin ratio, break-even point in dollars, and margin of safety (LO 3, 4, 5),...

    Determine contribution margin ratio, break-even point in dollars, and margin of safety (LO 3, 4, 5), AP ES-17 Felde Bucket Co., a manufacturer of rain barrels, had the following data for 2016: Sales Sales price Variable costs Fixed costs 2,500 units $40 per unit $24 per unit $19,500 Instructions (a) What is the contribution margin ratio? (b) What is the break-even point in dollars? (c) What is the margin of safety in dollars and as a ratio? (d) If the...

  • 20 Points Problem - Break even point & margin of safety Information concerning a product produced...

    20 Points Problem - Break even point & margin of safety Information concerning a product produced by Ejimaker Company appears here Sales price per unit $ 250 Variable cost per units 130 Total annual fixed manufacturing and operating costs $600,000 Required Determine the following: a) Contribution margin per unit. b) Determine the break-even point in units and sales dollars. c) Determine the sales volume in units and dollars that is required to attain a profit of 300,000. d) Determine the...

  • P18-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio...

    P18-2A Prepare a CVP income statement, compute break-even point, contribution margin ratio, margin of safety ratio    and sales for target net income Jorge Company bottles and distributes B-Lite, a diet soft drink. The beverage is sold for 50 cents per 16-ounce bottle to retailers, who charge customers 75 cents per bottle. For the year 2017, management estimates the following revenues and costs. Sales $1,800,000 Selling expenses - variable Direct materials 430,000 Selling expenses - fixed Direct labor 360,000 Administrative...

  • The Cumberland Company provides the following information: Break-Even in Units and Sales Dollars, Margin of Safety D...

    The Cumberland Company provides the following information: Break-Even in Units and Sales Dollars, Margin of Safety Drake Company produces a single product. Last year's income statement is as follows: Sales (18,000 units) $1,083,600 Less: Variable costs 723,600    Contribution margin $360,000 Less: Fixed costs 273,000    Operating income $87,000 Required: 1. Compute the break-even point in units and sales revenue. In your computations, round the contribution margin per unit to the nearest cent and round the contribution margin ratio to four decimal...

  • 1. Determine the break-even point. 2 Compute the margin of safety and explain its significance. 3....

    1. Determine the break-even point. 2 Compute the margin of safety and explain its significance. 3. Compute the degree of operating leverage at a particular level of sales and explain how it can be used to predict changes in net operating income 5.3 CVP Analysis - Excel Given the following information complete a Cve analysis 2 for JPL, Inc.: 4 Unit sales 5 Selling price per unit 6 Variable expenses per unit 7 Fixed expenses 11,200 units S75 per unit...

  • Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s...

    Break-Even Units, Contribution Margin Ratio, Multiple-Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $ 12,150,000 Total variable cost 7,533,000 Contribution margin $ 4,617,000 Total fixed cost 2,437,776 Operating income $ 2,179,224 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. $per unit 1(b). Compute contribution margin per unit. Enter your answer to the nearest...

  • 1. Margin of Safety a. If Canace Company, with a break-even point at $256,000 of sales,...

    1. Margin of Safety a. If Canace Company, with a break-even point at $256,000 of sales, has actual sales of $400,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2.   % b. If the margin of safety for Canace Company was 45%, fixed costs were $2,074,050, and variable costs were 55% of sales, what was the amount of actual sales (dollars)?...

  • Break Even Units, Contribution Margin Ratio, Multiple Product Breakeven, Margin of Safety, Degree of Operating Leverage...

    Break Even Units, Contribution Margin Ratio, Multiple Product Breakeven, Margin of Safety, Degree of Operating Leverage Jellico Inc.'s projected operating income (based on sales of 450,000 units) for the coming year is as follows: Total Sales $9,000,000 Total variable cost 6,030,000 Contribution margin $ 2,970,000 Total fixed cost 1.898,820 Operating income $ 1,071,180 Required: 1(a). Compute variable cost per unit. Enter your answer to the nearest cent. S per unit 1(b), Compute contribution margin per unit. Enter your answer to...

  • Break-Even Analysis & Margin of Safety (with more than one product) P 6-B The Medal Company...

    Break-Even Analysis & Margin of Safety (with more than one product) P 6-B The Medal Company make two products, Gold and Silver. Sales and cost data for these products follow. Gold Silver Sales (in units) 100,000 10,000 Selling price per unit $25 $150 Variable expenses per unit 100 Fixed expenses, for the company, are $900,000. 12 Required: 1) Using the above, complete the following: a) Prepare a contribution form income statement displaying dollar amounts and percentages for each product and...

  • Exercise 5-12 In 2019, Ivanhoe Company had a break-even point of $310,000 based on a selling price of $8 per unit and f...

    Exercise 5-12 In 2019, Ivanhoe Company had a break-even point of $310,000 based on a selling price of $8 per unit and fixed costs of $93,000. In 2020, the selling price and the variable costs per unit did not change, but the break-even point increased to $429,000 Your answer is correct. Compute the variable costs per unit and the contribution margin ratio for 2019. (Round Variable cost per unit to 2 decimal places, e.g. 2.25 and Contribution margin ratio to...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT