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    BEP & Margin of Safety Problems

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    Modern home appliances company places before you the following trading results:

    Year Sales Net Income
    2008 $50,000 $5,000
    2009 $60000 $9000

    Calculate the following:

    (a) Contribution margin ratio,
    (b) Fixed cost,
    (c) Variable cost during two years,
    (d) Break even point in dollars, and
    (e) Margin of safety for 2008 and 2009.

    (Ignore tax)

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    Solution Summary

    BEP and Margin of safety problems are examined.