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Using the following data, determine the following for each firm: Break even points in terms of units Margin of Safety Operating Leverage ABC, Inc XYZ,
- Using the following data, determine the following for each firm:
- Break even points in terms of units
- Margin of Safety
- Operating Leverage
ABC, Inc XYZ, Inc
| Tax Rate | 20% |
| 15% |
| Units Sold | 5000 |
| 5000 |
| Sales | $300,000 |
| $300,000 |
| Variable Costs | $180,000 |
| $60,000 |
| Contribution M |
|
|
|
| Fixed Costs | $75,000 |
| $195,000 |
| Operating Income |
|
|
|
- Determine number of units to be sold to reach a profit of $95,000 after taxes.
- Explain why one firm must sell more units to reach the $95,000 after-taxes target profit despite having a lower break-even point.
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The ASQ Auditing Handbook
Authors: J. P. Russell,
4th Edition
0873898478, 978-0873898478
