A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of...

Question:

A business had a margin of safety ratio of 20%, variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and operating income of $60,000 for the current year.

Calculate the current year's sales.

Sales Revenue

Sales revenue is the gross amount generated by the company within its operation.

Answer and Explanation:

The current year sale is $1,200,000

Sales can be computed by adding the margin of safety sales and break even point in sales.

By using the percentage, we can get the sales. Since margin of safety ratio and break event point ratio are complimentary.

Sales 100% = MOS 20% + BEPS 80%

960,000 / 80% =1,200,000


Learn more about this topic:

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How to Calculate Sales Revenue: Definition & Formula

from Financial Accounting: Help and Review

Chapter 5 / Lesson 27
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