FINC 577 Chapter 5 Notes Outline

Use the contribution margin approach chapter 5 47

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Unformatted text preview: Chapter 5-47 Example 5 For Gore Company actual sales are $1,200,000 and break-even sales are $840,000. Compute (a) breakthe margin of safety in dollars and (b) the margin of of safety ratio. Chapter 5-48 Example Example 6 The controller of Dalton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs. Chapter 5-49 Example 6 Instructions (a) Determine the fixed and variable costs component using the high-low method. highmethod. (b) Chapter 5-50 Prepare a graph showing the behavior of maintenance costs, and identify the fixed and variable cost element. Use 200-hour increments element. 200and $1,000 cost increment. Example Example 6 Month Total Maintenance Costs Total Machine Hours January $2,400 300 February 3,000 400 March 3,600 600 April 4,500 790 May 3,200 500 June 4,900 800 Chapter 5-51 Example 6 Chapter 5-52 Example Example 6 Chapter 5-53 Example 7 Track Manufacturing’s sales slumped badly in 2011. For the first time in its history, it operated at a loss. The company’s...
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