Question

Contribution Margin Ratio Silberg Company’s controller prepared the following budgeted income statement for the coming year:
Sales ............... $415,000
Total variable cost .......... 282,200
Contribution margin .......... $132,800
Total fixed cost .......... 63,000
Operating income .......... $ 69,800

Required:
1. What is Silberg’s variable cost ratio? What is its contribution margin ratio?
2. Suppose Silberg’s actual revenues are $30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Silberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.
4. What is Silberg’s expected margin of safety?
5. What is Silberg’s margin of safety if sales revenue is $380,000?


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  • CreatedSeptember 22, 2015
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