Question

Breakeven analysis; margin of safety (LO 1) The Robinson Company sells sports decals that can be personalized with a player’s name, a team name, and a jersey number for $5 each. Robinson buys the decals from a supplier for $1.50 each and spends an additional
$0.50 in variable operating costs per decal. The results of last month’s operations are as follows:

Sales revenue ....... $10,000
Cost of goods sold..... 3,000
Gross profit........ 7,000
Operating expenses..... 2,500
Operating income...... $ 4,500

Required
a. What is Robinson’s monthly breakeven point in units? In dollars?
b. What is Robinson’s margin of safety?



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  • CreatedFebruary 21, 2014
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