Martin Holdings prepared the following budgeted income statement for the coming year.
|Sales revenue||$ 515,000|
|Total variable cost||402,950|
|Total Fixed costs||64,800|
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?