Arberg Company 's controller prepared the following budgeted income statement for the coming year Sales $415,000 Total variable cost 302,950 Contribution margin $112,050 Total fixed cost 64,800 Operating income $47,250 Required 1 What is Arberg 's variable cost ratio What is its Contribution margin...

1 Variable Cost Ratio 302950415000 073 or 73 Contribution Margin Rat ...

Arberg Company's controller prepared the following budgeted income statement for the coming year: Sales ........................$415,000 Total variable

Question:

Arberg Company's controller prepared the following budgeted income statement for the coming year:
Sales ........................$415,000
Total variable cost .........302,950
......$112,050
Total fixed cost ..............64,800
Operating income .........$47,250
Required:
1. What is Arberg's variable cost ratio? What is its ratio?
2. Suppose Arberg's actual revenues are $30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Arberg earn to break even? Prepare a income statement to verify the accuracy of your answer.
4. What is Arberg's expected margin of safety?
5. What is Arberg's margin of safety if sales revenue is $380,000?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...