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Margin of Safety and Operating Leverage Gonzales Company produces a single product. The projected income...

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Accounting

Margin of Safety and Operating Leverage
Gonzales Company produces a single product. The projected income statement for the coming year is as follows:
Sales(72,000@$15.00)
$1,080,000
Total variable cost
486,000
Contribution margin
$594,000
Total fixed cost
577,500
Operating income
$16,500
Required:
Compute the break-even sales dollars.
Compute the margin of safety in sales dollars.
Compute the degree of operating leverage.
Compute the new operating income if sales are 20% higher than expected.
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