Answer:
| Particular | Amount in $ |
| Sales | 1,000,000 |
| Less: | |
| Variable Cost | 250,000 |
| Contribution Margin | 750,000 |
| Less: | |
| Fixed Cost | 600,000 |
| Net Profit | 150,000 |
- Contribution margin ratio.
=Contribution /Sales
=750,000 /1,000,000
=0.75
=75%
- Break-even sales volume.
=Fixed expense / CM ratio
=600,000 /0.75
=$ 800,000
- Margin of safety ratio.
Total actual sales – Break-even sales
=1,000,000 -800,000
=200,000
Margin of safety percentage = Margin of safety in dollars/Total actual sales
=200,000 /1,000,000
=0.20
=20%
- Net operating income percentage.
=. Net operating income / sales
=150,000 /1,000,000
=0.15
=15%
