What is rezlers variable cost ratio

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Reference no: EM13940092

SALES REVENUE APPROACH, VARIABLE COST RATIO, CONTRIBUTION MARGIN RATIO

Rezler Company's controller prepared the following budgeted income statement for the coming year:

Sales	$315,000
Less: Variable expenses	141,750
Contribution margin	$173,250
Less: Fixed expenses	63,000
Operating income	$110,250

Required:

1. What is Rezler's variable cost ratio? What is its contribution margin ratio?

2. Suppose Rezler's actual revenues are $30,000 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 Rezler earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.

4. What is Rezler's expected margin of safety?

5. What is Rezler's margin of safety if sales revenue is $280,000?

Reference no: EM13940092

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