Denton Company offers two products. At present, the following represents the usual results of a month's operations:
Product A/ Product B
sales revenue $115,000 / $1.20
variable expenses 50,000/0.60
contribution margin $65,000 / $0.60
fixed expenses
net operating income
required:
a. find break-even in dollars.
b. find the margin of safety in dollars.
c. the company is considering decreasing product A's unit sales to $80,000 and increasing product B's unit sales to 180,000, leaving unchanged the selling price per unit, variable expense per unit, and total fixed expenses. Would you advise adopting this plan and why?
d. refer to part c above, find the break-even in dollars.
e. under the new plan in part c, find the margin of safety in dollars.