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# Managerial Accounting Problem

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7. The following information relates to Snowbird Corporation:

What is Snowbird's margin of safety?
A) \$62,500
B) \$187,500
C) \$100,000
D) \$212,500

8. Carver Company produces a product which sells for \$40. Variable manufacturing costs are \$18 per unit. Fixed manufacturing costs are \$5 per unit based on the current level of activity, and fixed selling and administrative costs are \$4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The contribution margin per unit is:
A) \$7
B) \$17
C) \$22
D) \$16

9. Winger Corp. sells a product for \$5 per unit. The fixed expenses are \$210,000 and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Winger Corp. to realize a profit of 10% of sales?
A) \$700,000
B) \$525,000
C) \$472,500
D) \$420,000

#### Solution Preview

7. The following information relates to Snowbird Corporation:

What is Snowbird's margin of safety?
A) \$62,500
B) \$187,500
C) \$100,000
D) \$212,500

Margin of safety = actual or budgeted sales - breakeven sales
= \$500,000 - \$312,500
= \$187,500

The variable price per unit = (\$312,500 - \$250,000)/2,000 = \$31.25 or 20% of sales

Actual sales = Net operating income + Total fixed expenses + Total variable expenses
X = 150,000 + ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment of more than 300 words of text.

\$2.19