Margin of Safety and Operating Leverage Medina Company produces a single product. The projected income...
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Margin of Safety and Operating Leverage Medina Company produces a single product. The projected income statement for the coming year is as follows: Sales (56,000 units @ $15.00) $840,000 226,800 Total variable cost Contribution margin $ 613,200 591,300 Total fixed cost Operating income $ 21,900 Required: 1. Compute the break-even sales dollars. 2. Compute the margin of safety in sales dollars. $ 3. Compute the degree of operating leverage. 4. Compute the new operating income if sales are 20% higher than expected. $
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