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Managerial Accounting Problem

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

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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

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

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