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    Break even analysis and current margin of safety

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    Contribution Margin Concepts The following information is taken from the 2007 records of Navajo Art Shop.
    Fixed Variable Total
    Sales $750,000
    - Goods sold $300,000
    Gross profit 450,000
    Costs
    Goods sold
    Labor $160,000 60,000
    Supplies 2,000 5,000
    Utilities 12,000 13,000
    Rent 24,000 —
    Advertising 6,000 24,500
    Miscellaneous 6,000 10,000
    Total costs $210,000 $112,500 (322,500)
    Net income $127,500

    Required
    a. Determine the annual break-even dollar sales volume.
    b. Determine the current margin of safety in dollars.
    c. What is the annual break-even dollar sales volume if management makes a decision that increases fixed costs by $35,000?

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    https://brainmass.com/business/accounting/249070

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    Solution Summary

    The solution examines a break even analysis and a current margin of safety. The annual break-even dollar sales volume if management makes a decision to increased fixed cost is determined.

    $2.19

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