# (Answered): Martin Holdings prepared the following budgeted income statement for the coming year….

Martin Holdings prepared the following budgeted income statement for the coming year.

 Sales revenue \$ 515,000 Total variable cost 402,950 Contribution Margin \$112,050 Total Fixed costs 64,800 Operating income \$47,250

1 what is Martin Holding’s variable cost ratio? What is its contribution margin ratio?

2 Suppose Martin Holdings’s actual revenues are \$35,000 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 Martin Holdings earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer.

4 What is Martin Holdings’s expected margin of safety?

5 What is Martin Holdings’s margin of safety if sales revenue is \$380,000?

1. Variable cost ratio = Variable cost/Sales = \$402,950 / \$515,000 = 78.24%

Contribution margin ratio = Contribution margin/Sales = \$112,050 / \$515,000 = 21.76%

2. If sales increase \$35,000, operating income will increase an amount of Contribution margin ratio: \$35,000 x 0.2176 = \$7,616

3. BEP = FC / Contribution margin ratio = \$64,800 / 0.2176 = \$297,794.12

Income statement:

 Sales \$297,794.12 Less: Variable expenses \$232,994.12 Contribution margin \$64,800 Less: Fixed expenses \$64,800 Operating income \$0

4. Expected margin of safety = \$515,000 – \$297,794.12 = \$217,205.88

5. If sales revenue is \$380,000, margin of safety is \$380,000 – \$297,794.12 = \$82,205.88

Order NOW for a 10% Discount
Pages (550 words)
Approximate price: -

Why Us?

Top Quality and Well-Researched Papers

All ourbpapers are written from scratch. In fact, Clients who ask for paraphrasing services are highly discouraged. We have writers ready to craft any paper from scratch and deliver quality ahead of time.

Our writers keeps you posted on your papers progress - providing you with paper outline/draft. You are also at liberty to communicate directly with your writer.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time, in many cases quite ahead of time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

## Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.

## Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.