Compute the margin of safety in sales revenue

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Reference no: EM133433900

Question: Parson Company produces a single product. The projected income statement for the upcoming year, based on sales of 192,000 units, is as follows:

Sales revenue	$3,550,000
Less: Variable costs	$1,850,000
Contribution margin	$1,700,000
Less: Fixed costs	$950,000
Operating income	$750,000

Required:

Compute the unit contribution margin and the units that must be sold to break even. Suppose that 45,000 units are sold above the breakeven point. What is the profit?
Compute the contribution margin ratio and the breakeven point in dollars. Suppose that revenues are $365,000 greater than expected. What would the total profit be?
Compute the margin of safety in sales revenue.
Compute the operating leverage. Compute the new profit level if sales are 18% higher than expected.
Assume the income tax rate is 35%. How many units must be sold to earn an after-tax profit of $295,000?

Reference no: EM133433900

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