Accounting help. Replace each \"?\" with a number. If you could show how you got

ID: 2611683 • Letter: A

Question

Accounting help. Replace each "?" with a number. If you could show how you got the answer I'd really appreciate it!

Data Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45 per unit Fixed expenses $240,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relationships Compute the CM ratio and variable expense ratio Selling price per unit ? per unit Variable expenses per unit ? per unit Contribution margin per unit ? per unit CM ratio ? Variable expense ratio ? Compute the break-even Break-even in unit sales ? units Break-even in dollar sales ? Compute the margin of safety Margin of safety in dollars ? Margin of safety percentage ? Compute the degree of operating leverage Sales ? Variable expenses ? Contribution margin ? Fixed expenses ? Net operating income ? Degree of operating leverage ?

Explanation / Answer

Answer:
Selling Price per Unit = $60 per Unit
Variable Expenses per Unit = $45 per Unit
Contribution Margin per unit = Selling Price per Unit – Variable Expenses per Unit
Contribution Margin per unit = $60 - $45
Contribution Margin per unit = $15 per Unit

CM ratio = Contribution Margin / Sales * 100
CM ratio = 15 / 60 * 100
CM ratio = 25%

Variable Expense Ratio = Variable Expense / Sales * 100
Variable Expense Ratio = 45 / 60 * 100
Variable Expense Ratio = 75%

Break Even in Unit Sales = Fixed Expense / Contribution Margin per Unit
Break Even in Unit Sales = 240,000 / 15
Break Even in Unit Sales = 16,000 Units

Break Even in Dollar Sales = Fixed Expense / Contribution Margin Ratio
Break Even in Dollar Sales = 240,000 / 0.25
Break Even in Dollar Sales = $960,000

Margin of Safety in Dollars = Actual Sales – Break Even Sales
Actual Sales = 20,000 * $60
Actual Sales = $1,200,000

Margin of Safety in Dollars = $1,200,000 - $960,000
Margin of Safety in Dollars = $240,000

Margin of Safety percentage = (Actual Sales – Break Even Sales) / Actual Sales * 100
Margin of Safety percentage = ($1,200,000 - $960,000) / $1,200,000 * 100
Margin of Safety percentage = 240,000 / 1,200,000 * 100
Margin of Safety percentage = 20%

Sales

1,200,000

Variable Expenses

900,000

Contribution Margin

300,000

Fixed Expenses

240,000

Net Operating Income

60,000

Degree of Operating Leverage = Contribution Margin / Operating Income
Degree of Operating Leverage = 300,000 / 60,000
Degree of Operating Leverage = 5.0 times