I need help..Thanks beCen as In requirement 2 3-40 CVP analysis, margin of safet
ID: 2395058 • Letter: I
Question
I need help..Thanks
beCen as In requirement 2 3-40 CVP analysis, margin of safety. Marketing Docs prepares marketing plans for growing businesses For 2017, budgeted revenues are $1,500,000 based on 500 marketing plans at an average rate pe $3,000. current fixed costs are $400,000 and variable costs average $2,000 per marketing plan. (Consider each of the following separately.) The company would like to achieve a margin of safety percentage of at least 45%. The company's 1. 2. Calculate Marketing Docs' breakeven point and margin of safety in units. Which of the following changes would help Marketing Docs achieve its desired margin of safety? Require a. b. c. The average revenue per customer increases to $4,000. The planned number of marketing plans prepared increases by 5%. Marketing Docs purchases new software that results in a 5% increase to fixed costs but reduces variable costs by 10% per marketing plan.Explanation / Answer
2a would achieve the margin of safety ratio more than 45%
Sales 3000 Less Variable cost 2000 Contribtion margin per marketing plan 1000 1 Breakeven in rooms = Fixed cost / contribution margin per marketing plan Fixed cost 400000 Contribtion margin per marketing plan 1000 Break even in markerting plan 400 2 Breakeven in dollars = Breakeven in marketing plan * Average rate per plan Break even in markerting plan 400 Average rate per plan 3000 Breakeven in dollars 1200000 3 Actual sales 1500000 Breakeven sales in dollars 1200000 Margin of safety 300000 Margin of safety ratio = Margin of safety / actual sales Margin of safety 300000 Actual sales 1500000 Margin of safety ratio 20% 2 a Sales 4000 Less Variable cost 2000 Contribtion margin per marketing plan 2000 1 Breakeven in rooms = Fixed cost / contribution margin per marketing plan Fixed cost 400000 Contribtion margin per marketing plan 2000 Break even in markerting plan 200 2 Breakeven in dollars = Breakeven in marketing plan * Average rate per plan Break even in markerting plan 200 Average rate per plan 4000 Breakeven in dollars 800000 3 Actual sales 1500000 Breakeven sales in dollars 800000 Margin of safety 700000 Margin of safety ratio = Margin of safety / actual sales Margin of safety 700000 Actual sales 1500000 Margin of safety ratio 47%