Question - Cost volume profit analysis of managerial accounting
Alden company prepared the following budget income statement for the coming year.
Sales revenue $ 515000
Total variable cost 402950
Contribution Margin 112050
Total Fixed costs 64,800
Operating income 47250
Required:
1. What is Alden's variable cost ratio? What is its contribution margin ratio?
2. Suppose Alden's actual revenues are $35000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Alden earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.
4. What is Alden's expected margin of safety?
5. What is Alden's margin of safety if sales revenue is $380000?