4-37 Algo Margin of Safety and Operating Leverage
Medina Company produces a single product. The projected income statement for the coming year is as follows:
Sales (60,000 units @ $23.00)$1,380,000Total variable cost345,000Contribution margin$ 1,035,000Total fixed cost1,000,500Operating income$ 34,500
1. Compute the break-even sales dollars.
2. Compute the margin of safety in sales dollars.
3. Compute the degree of operating leverage.
4. Compute the new operating income if sales are 20% higher than expected.
Answer 1) Break-even sales dollars = 1334000 2) Margin of... View the full answer