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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Exercise 4-31 Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Company’s controller prepared the following budgeted income statement for the coming year:
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Sales |
$415,000 |
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Total variable cost |
302,950 |
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Contribution margin |
$112,050 |
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Total fixed cost |
64,800 |
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Operating income |
$ Â 47,250 |
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 Required: |
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1.      What is Arberg’s variable cost ratio? What is its contribution margin ratio?
2.      Suppose Arberg’s actual revenues are $30,000 more than budgeted. By how much will oper- ating income increase? Give the answer without preparing a new income statement.
3.      How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.
4.      What is Arberg’s expected margin of safety?
5.      What is Arberg’s margin of safety if sales revenue is $380,000?
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