Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000on100,000units, selling
Question:
Viejol Corporation has collected the following information after its first year of sales. Sales were $1,600,000on100,000units, selling expenses $250,000(40% variable and 60% fixed), direct materials $490,000, direct labor $290,000, administrative expenses $270,000(20% variable and 80% fixed), and manufacturing overhead $380,000(70% variable and 30% fixed). Top management has asked you to do CVP analysis so that it can make plans for the coming year. It has projected that unit sales will increase by 10% next year.
the company meets its target net income number, by what percentage could its sales fall before it is operating at a loss? That is, what is its margin of safety ratio?(Round answer to 1 decimal place, e.g. 10.5.)
Margin of safety ratio
%