Question:
A company with a break-even point at $900,000 in sales revenue and had fixed costs of $225,000. When actual sales were $1,000,000 variable costs were $750,000.
1. Determine the margin of safety expressed in dollars:
a. $1,000,000
b. $900,000
c. $100,000
d. $225,000
2. Determine the margin of safety expressed as a percentage of sales:
a. 10%
b. 90%
c. 1%
d. 9%
3. Determine the contribution margin ratio:
a. 35%
b. 25%
c. 30%
d. 15%
4. Determine the operating income:
a. $35,000
b. $25,000
c. $30,000
d. $15,000
5. Determine the total assets:
a. $1,000,000
b. $1,900,000
c. $2,225,000
d. Cannot determine from information given.