Demonstrate what margin of safety is

Assignment Help Financial Accounting
Reference no: EM132657358

Units sold or revenue earned above and beyond the break-even point contributes to the margin of safety for a company. Margin of safety is a crude measure of risk, in that it serves as the padding between profit and the break-even point.

Complete the following:

Problem 1: Expressed in terms of units, if a company hits its break-even point in units (say, 100 units) and actually sells 400 units, then the margin of safety is units. Similarly, if the break-even point in sales revenue is $200,000, and it actually has sales revenue of $400,000, then its margin of safety is $.

Reference no: EM132657358

Questions Cloud

What is byron margin of safety in sales and in units : What is Byron's margin of safety in sales and in units when Byron sells 730 units? CVP analysis is used to analyze the effects of changes in selling prices
Find what is the margin of safety in terms of units : Find what is the margin of safety in terms of both units and sales revenue? Round your answers to two decimal places, if necessary
Political influences can affect decisions of judges : What legal and political influences can affect the decisions of judges? How does the judiciary play a part in policymaking?
How many units must the company sell to attain : Given the cost and pricing structure for the company's product, how many units must the company sell to attain its target income?
Demonstrate what margin of safety is : Demonstrate what margin of safety is. Units sold or revenue earned above and beyond the break-even point contributes to the margin of safety for a company.
Maximum possible subscription price-the clifford corporation : The Clifford Corporation has announced a rights offer to raise $30 million for a new journal, the Journal of Financial Excess.
How much revenue must earn to reach target operating income : How much revenue must it earn to reach its target operating income? When a company decides that it wants to earn more than the break-even point of income
Distinguish between inferential and descriptive statistics : Distinguish between the inferential and descriptive statistics discussed in the research.
Most prominent issues in American politics : One of the most prominent issues in American politics today is the growing size of the national debt.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Smuggling teenage girls and boys out of the u.s

Pre-search Activities A confidential informant has provided your department with detailed information related to a human trafficking operation. The informant has identified and confirmed that the operation is involved in smuggling teenage girls and b..

  How and where can the stakeholders of the organization

Does this view put emphasis on a question of whether external or internal factors are more important in gaining and maintaining competitive advantage? Why?

  Savings account paying a guaranteed interest rate

Matt recently deposited $31,250 in a savings account paying a guaranteed interest rate of 5.5 percent for the next 10 years.(Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) A) If Matt expects his margin..

  Planning and budgeting important to organization success

Why are planning and budgeting important to an organization's success? What are some operational and financial impacts as a result from planning and budgeting?

  Compute the expected balance in accounts receivable

Prepare a schedule of cash collections for May through July and compute the expected balance in Accounts Receivable as of July 31.

  Each dollar of sales after deducting the cost of goods sold

A company reported total sales of $1,200,000 and $1,322,000 for the years 2010 and 2011 respectively. What is the year-over-year percentage increase in sales for 2011? Which ratio can be used to assess how much profit was made, on average, on each do..

  Discuss the importance of the statement of cash flows

Discuss the importance of the statement of cash flows as an analytical took for users of financial statements. Explain the meaning of the three categories of a statement of cash flows.

  Exercise some of the principals outlined within the code

Is the management accoutant's code ethic a sound one? can you think of any situations or example in which a management accountant would need to exercise some of the principals outlined within the code?

  Determine the effective-interest rate

Headland Company sells 8% bonds having a maturity value of $2,400,000 for $2,053,950. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1. Collapse question part (a) Determine the effective-inter..

  What should be the depreciation expense for the equipment

As a result of this improvement, the company estimates that the useful life of the equipment will be extended an additional five years. What should be the depreciation expense for this equipment in 2014?

  What is the average days for collection

Which company do investors believe has greater prospects for growing earnings and dividends? Use the ratios to support your discussion.

  What is a fiscal year

What is a fiscal year? Why might companies choose to use a fiscal year that is not a calendar year? What about taxes? Do you suppose that the fiscal year

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd