Question 1: The following information relates to Snowbird Corporation:
Sales at the break-even point $312,500
Total fixed expenses $250,000
Net operating income $150,000
What is Snowbird's margin of safety?
A) $62,500
B) $187,500
C) $100,000
D) $212,500
Question 2: Carver Company produces a product which sells for $40. Variable manufacturing costs are $18 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The contribution margin per unit is:
A) $7
B) $17
C) $22
D) $16
Question 3: Winger Corp. sells a product for $5 per unit. The fixed expenses are $210,000 and the unit variable expenses are 60% of the selling price. What sales would be necessary in order for Winger Corp. to realize a profit of 10% of sales?
A) $700,000
B) $525,000
C) $472,500
D) $420,000