Using the data below, perform calculations. I need to understand the what the fo
ID: 2475067 • Letter: U
Question
Using the data below, perform calculations. I need to understand the what the formulas are so, please show and explain your work.
Determine your margin of safety based on your monthly sales over the break-even sales.
Your new food service operation has the following expenses:
Salary $ 3,000.00 per month
Utilities $ 375.00 per month
Contract Services $ 575.00 per month
Advertising $ 190.00 per month
Rent $ 1,000.00 per month
Insurance $ 100.00 per month
Accounting and Legal fees $ 175.00 per month
Permits and Licenses $ 75.00 per month
Operating Supplies 10% of monthly sales
Hourly Wages 30% of monthly sales
Food Cost 25% of monthly sales
Explanation / Answer
Answer
Figures in $
Particulars
Amount
Monthly Sales
a
1
Operating supplies
b
0.1
Hourly wages
c
0.3
Food cost
d
0.25
Contribution (a-b-c-d)
e
0.35
P/V ratio (e/a) *100
f
35.00%
Salary
3000
Utilities
375
Contract services
575
Advertising
190
Rent
1000
Insurance
100
Accounting and legal fees
175
Permits and licenses
75
Total fixed cost
g
5490
Break even sales (g/f)
h
15685.71
Actual sales*
i
Margin of safety (i -h)
* Actual sales figures is not provided
Figures in $
Particulars
Amount
Monthly Sales
a
1
Operating supplies
b
0.1
Hourly wages
c
0.3
Food cost
d
0.25
Contribution (a-b-c-d)
e
0.35
P/V ratio (e/a) *100
f
35.00%
Salary
3000
Utilities
375
Contract services
575
Advertising
190
Rent
1000
Insurance
100
Accounting and legal fees
175
Permits and licenses
75
Total fixed cost
g
5490
Break even sales (g/f)
h
15685.71
Actual sales*
i
Margin of safety (i -h)
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