How many units of each product mp3 players and satellite

Reference no: EM13581315

Margin of Safety

a. If Fama Company, with a break-even point at $324,000 of sales, has actual sales of $540,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.

1. $

2. %

b. If the margin of safety for Watkins Company was 20%, fixed costs were $1,172,800, and variable costs were 80% of sales, what was the amount of actual sales (dollars)?
(Hint: Determine the break-even in sales dollars first.)
$

Operating Leverage

Varner Inc. and King Inc. have the following operating data:

	Varner Inc.	King Inc.
Sales	$256,500	$684,000
Variable costs	102,900	410,400
Contribution margin	$153,600	$273,600
Fixed costs	89,600	102,600
Income from operations	$64,000	$171,000

a. Compute the operating leverage for Varner Inc. and King Inc. If required, round to one decimal place.

Varner Inc.
King Inc.

b. How much would income from operations increase for each company if the sales of each increased by 15%? If required, round answers to nearest whole number.

	Dollars	Percentage
Varner Inc.	$		%
King Inc.	$		%

Sales Mix and Break-Even Sales

New Wave Technology Inc. manufactures and sells two products, MP3 players and satellite radios. The fixed costs are $174,400, and the sales mix is 80% MP3 players and 20% satellite radios. The unit selling price and the unit variable cost for each product are as follows:

Products	Unit Selling Price	Unit Variable Cost
MP3 players	$40	$30
Satellite radios	100	60

a. Compute the break-even sales (units) for both products combined.
units

b. How many units of each product, MP3 players and satellite radios, would be sold at the break-even point?

MP3 players	units
Satellite radios	units

Reference no: EM13581315

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