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A company is budgeting to sell 200,000 units of its product next year at a price of $15 per unit. Fixed costs will be $1,232,000 and the variable cost/sales ratio is 44%.
What is the breakeven sales revenue figure and what is the margin of safety in the budget?
A Breakeven $2,200,000, margin of safety 26.7%
B Breakeven $2,200,000, margin of safety 36.4%
C Breakeven $2,800,000, margin of safety 6.7%
D Breakeven $2,800,000, margin of safety 7.1%-> variable cost/sales ratio is 44% ; As per solution of the kit c/s ratio is 56%. How will be know that C/s ratio is 56% ?
sir my question relates to dec 13 throughput accounting.
in part b why examinor uses 1000 units first because if we look at ranking
large panel has ranking first and small panel ranking second
and why 1000 units instead of annual demand…Amit: If the variable cost / sales is 44%, the it means that for every $100 sales, the variable cost is $44.
The contribution is sales less variable costs, so for every $100 sales, the contribution will be $56 (100 – 44).
So the contribution to sales ratio will be 56/100 or 56%
Soooraj:
If you look at the second paragraph of the question, it says that they have agreed to supply 1000 of the small panels.
So….even though we prefer large panels, we have to make 1,000 panels. Whatever time is left over we use for the best one, which is indeed large panels.
(When are asking about a different topic, please start a new thread rather than asking below a question on a different topic)
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