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 (65,000 units @ $25.00) $1,650,000 Total variable cost 610,500 Contribution margin $ 1,039,500 Total fixed cost 1,008,000 Operating income $ 31,500 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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