James Company has a margin of safety percentage of 21% based on its actual sales

Question

James Company has a margin of safety percentage of 21% based on its actual sales. The break-even point is $250,000 and the variable expenses are 45% of sales. Given this information, the actual profit is (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.): James Company has a margin of safety percentage of 21% based on its actual sales. The break-even point is $250,000 and the variable expenses are 45% of sales. Given this information, the actual profit is (Do not round your intermediate calculations. Round your final answer to the nearest dollar amount.):

Explanation / Answer

Statement showing computations Particulars Amount Break even point    250,000.00 Variable Expenses @45%    112,500.00 Contribution = 250,000 - 112,500    137,500.00 AT BEP Contribution = Fixed Costs= 137,500 Margin of Safety = 21% 21% = (MOS Sales - Break even Sales)/MOS Sales .21 MOS Sales= MOS Sales - Break even Sales 250,000 = .79 MOS Sales MOS Sales = 316,455.70 Contribution at Actual Sales= 316,455.70*.55    174,050.63 Fixed Costs    137,500.00 Actual Profit      36,550.63

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