A company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the
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A company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the following:
1. Contribution margin ratio.
2. Break-even sales volume.
3. Margin of safety ratio.
4. Net operating income as a percentage of sales.
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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