Break even point & margin of safety
Not what you're looking for?
Small Fries is a company that processes gourmet potatoes into little french fries. Each package has a contribution margin of $2.50. Small Fries have total fixed costs of $40,000 each period. The selling price of one package is $5. Sales for the most recent period totaled $90,000.
a. What is the company's breakeven point in units? In dollars?
b. What was the company's margin of safety for the most recent period?
c. What does the margin of safety represent?
Purchase this Solution
Solution Summary
The solution explains the calculation of break-even point and margin of safety.
Solution Preview
a. What is the company's breakeven point in units? In dollars?
Breakeven point in units is given as Fixed Costs/Contribution Margin per unit
Contribution Margin = Selling Price - Variable Cost = 2.50
Fixed Costs = ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Introduction to Finance
This quiz test introductory finance topics.