Question

Oriole Bucket Co., a manufacturer of rain barrels, had the following data for 2019.

Sales		2,940	units
Sales price		$50	per unit
Variable costs		$40	per unit
Fixed costs		$11,760

(a)

Correct answer iconYour answer is correct.

What is the contribution margin ratio?

Contribution margin ratio

enter the Contribution margin ratio in percentages

%

(b)

Correct answer iconYour answer is correct.

What is the break-even point in dollars?

Break-even point

$enter the break-even point in dollars

(c)

Margin of safety		$enter the margin of safety in dollars
Margin of safety ratio		enter the margin of safety ratio in percentages	%

Answer 1

Requirement (a)

Contribution margin ratio = Contribution margin / Sales Price * 100

(50-40)/50*100

20%

Requirement (b)

Break even point in sales dollars = Fixed Cost / Contribution margin ratio

11760/20%

$58,800

Requirement (c)

Margin of safety in dollars : Total Sales - Break even sales

147,000 - 58,800

$88,200

Margin of safety (%) = 88200/147000 = 60%

	Requirement (d)
	Required contribution :
	2940*10*130%	$        38,220
	Total Sales Required :
	38220/20%	$      191,100
	Less : Present Sales	$     (147,000)
	Increase in sales	$        44,100