Solution-Explain margin of safety and operating leverage

Explain margin of safety and operating leverage

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Reference no: EM131756139

Question: Due to erratic sales of its sole product a disposable pocket camera Markline Company has been experiencing difficulty for some time. The Company's contribution format income statement for the most recent month is given below:

Sales (30,000 units x $20.00 per unit)	$600,000
Variable Expenses	360,000
Contribution Margin	240,000
Fixed Expenses	250,000
Net Operating Loss	$(10,000)

1. Compute the company's CM ratio and its break-even point in both units and dollars. Explain what CM ratio and break-even means.

2. Explain margin of safety and operating leverage. How would these apply to question 1.

Reference no: EM131756139

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Explain margin of safety and operating leverage

Reference no: EM131756139

Reference no: EM131756139

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