Mozena Corporation has collected the following information after its first year of sales. Sales were $1,500,000 on 100,000 units; selling expenses $250,000 (40% variable and 60% fixed); direct materials $511,000; direct labor $290,000; administrative expenses $270,000 (20% variable and 80% fixed); manufacturing overhead $350,000 (70% variable and 30% fixed). Top management has asked you to do a CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.
Contribution margin for current year = $300,000
Contribution margin for projected year = $330,000
Fixed Costs = $471,000
Break-even point in units = 157,000 units
Break-even point in dollars = $
The company has a target net income of $200,000. What is the required sales in dollars for the company to meet its target? (Round answer to 0 decimal places, e.g. 1,225.)
Sales dollars required for target net income = $3,355,000
I need help with the last part:
If the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin of safety ratio? (Round answer to 1 decimal place, e.g. 10.5%.)
Margin of safety ratio = ____%