Determining break-even point and margin of safety


Q1) Penury Company offers two products. Currently, following represents 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
Net operating income         $30,000

Determine break-even point in terms of dollars, margin of safety in terms of dollars.

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Accounting Basics: Determining break-even point and margin of safety
Reference No:- TGS018440

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