QUIZ I_Before Mid Term Exam_21 Oct 2015_Marketing3A_BATCH 2

# Mercantile corporation has sales of 2000000 variable

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15. Mercantile Corporation has sales of \$2,000,000, variable costs of \$800,000, and fixed costs of \$900,000. Mercantile ’s margin of safety ratio is Contribution Margin (CM) = \$2,000,000 \$800,000 = \$1,200,000 CM Ratio = (Contribution Margin : Sales) x 100% = (\$1,200,000 : \$2,000,000) x 100% = 60% BEP Sales in \$ = Total Fixed Cost : CM Ratio = \$900,000 : 60% = \$1,500,000 Margin of Safety = Actual or Expected Sales BEP Sales = \$2,000,000 - \$1,500,000 = \$500,000 Margin of Safety Ratio = (Margin of Safety : Actual or Expected Sales) x 100% Margin of Safety Ratio = (\$500,000 : \$2,000,000) x 100% = 25% # DO YOUR BEST AND GOOD LUCK FOR THE EXAM #
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