Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. 9-29 margin of safety harold mcwilliams owns and m

9-29 Margin of Safety Harold McWilliams owns and manages a general merchandise store in a...

90.2K

Verified Solution

Question

Accounting

9-29

Margin of Safety Harold McWilliams owns and manages a general merchandise store in a rural area of Virginia. Harold sells appliances, clothing, auto parts, and farming equipment, among a wide variety of other types of merchandise. Because of normal seasonal and cyclical fluctuations in the local economy, he knows that his business will also have these fluctuations, and he is planning to use CVP analysis to help him understand how he can expect his profits to change with these fluctuations. Harold has the following information for his most recent year. Cost of goods sold represents the cost paid for the merchandise he sells, while operating costs represent rent, insurance, and salaries, which are entirely fixed.

Sales $650,000
Cost of merchandise sold 422,500
Contribution margin 227,500
Operating costs 105,000
Operating profit $122,500

Required

  1. What is Harolds margin of safety (MOS) in dollars? What is the margin of safety (MOS) ratio?

  2. Of what managerial significance are the measures calculated in requirement 1?

  3. What is Harolds margin of safety (in dollars) and operating profit if sales should fall to $500,000?

No picture file pelase

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Physics
1.2K views

Charged Spheres #1 Charged spheres are placed as follows: Name charge (μC) x location (m) y location (m) A +7.0 0.0 0.0 B -8.0 -2.0 3.0 Determine the...

Biology
1.2K views

ClaudioMonteverdi wasknown for hisharmonies andinstrumentalaccompanimentS.A. tediousB. adventurousC. noisy

Geometry
1.2K views

Prove Triangle XYZ is equilateral B AK Z Y C Given Angle CBY Angle YBX...

Calculus
1.2K views

Sketch the graph of the following function and use it to answer the following questions...

Algebra
1.2K views

bmit Assignment Quiz 4 1 4 4 00 58 39 Question 5 of 16 Step...

Accounting
1.2K views

It is suggested that if one fails to plan, one automatically plans to fail. A...

Accounting
1.2K views

?^^^^^^^^^^^ Ifthehomeowner'spolicycovers70%ofthereplacementcostandtheactualcashvalueofthelossis$25,000,whatwouldbetheamountofrecoveryiftherepaircostsamountto$35,000? Actualcashvalue:$25,000 Repaircosts:$35,000 Coveragepercentage:70% ...

Accounting
1.2K views

write a full detail of employment contract between eli ali oil and gas enterprise who...

Accounting
1.2K views

Exercise 6-7 Lisa Company had 157 units in beginning inventory at a total cost of...

Accounting
1.2K views

Required information The Foundational 15 (Algo) [LO12-1, LO12-2, LO12-3, LO12-5, LO12-6] Skip to question ...

Accounting
1.2K views

Java Jam purchased a coffee drink machine on January 1, 2024. for $33,500. Expected useful...

Accounting
1.2K views

Morgan Freeman is investing $9,757 at the end of each year in a fund that...