If sales are $00, 000 and sales at the break-even point are $250, 000. what is the margin of safety? a. 17% b. 20% c. 83% d. 120% If for Jones Inc. the contribution margin is $200, 000 and operating income is $40, 000, what is the operating leverage? a. 240, 000 b. 160, 000 c. 5 d. 0.4 A budgeting method which provides for maintenance of a twelve-month projection into the future is called zero-base budgeting. The number of units of each commodity expected to be manufactured to meet budgeted sales and inventory requirements is set forth in the direct materials purchase budget. A flexible budget is a budget is actually series of budgets of varying rates of activity. The budgeting method which requires all levels of management to start from zero and estimate sales, production, and other operating data as though operations were being started for the first time is called continuous budgeting. The production budget is normally the first budget prepared. If budgeted sales are 100, 000 units, desired ending inventory is 30, 000 units, and estimated beginning inventory is 10, 000 units, the budgeted production for the year would be 80, 000 units. Weaknesses in financial position, such as an abnormally large amount of current liabilities in relation to current assets, is normally revealed by the budgeted balance sheet. By using computerized simulation models, managers can determine the impact of various operating alternatives on the master budgets. Budgets and budget performance reports can have a detrimental effect on management behavior. The second budget normally prepared as part of the master budget is the production budget