Margin of safety in terms of dollars
Not what you're looking for?
JJ company offers 2 products. At the present, the following represents the usual results of a month's operations:
Product K Product L
Amount Per Unit Amount Per unit Combined amount
Sales revenue $120,000 $1.20 $80,000 $0.80 $200,000
Variable expenses $60,000 0.60 60,000 $0.60 120,000
Contribution margin $60,000 $0.60 $20,000 $0.20 $80,000
Fixed expenses
50,000 (combined amount)
Net operating income
$30,000 (combined amount)
a-Find the break-even point in terms of dollars
b-Find the margin of safety in terms of dollars
c-The company is considering decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000 leaving unchanged the selling price per unit, variable expense per unit, and total fixed expenses. Would you advise adopting this plan?
d-Refer to (c) above. Under the new plan, find the break-even point in terms of dollars.
e-Under the new plan (c) above, find the margin of safety in terms of dollars.
Purchase this Solution
Solution Summary
This provides the steps to calculate the margin of safety in terms of dollars
Solution Preview
J company offers 2 products. At the present, the following represents the usual results of a month's operations:
Product K Product L
Amount Per Unit Amount Per unit Combined amount
Sales revenue $120,000 $1.20 $80,000 $0.80 $200,000
Variable expenses $60,000 0.60 60,000 $0.60 120,000
Contribution margin $60,000 $0.60 $20,000 $0.20 ...
Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
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.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.