Asked by Muwal Deepak on Jun 28, 2024
Verified
Hopi Corporation expects the following operating results for next year: What is Hopi expecting total fixed expenses to be next year?
A) $75,000
B) $100,000
C) $200,000
D) $225,000
Fixed Expenses
Costs that do not change in total regardless of changes in the volume of production or sales.
Operating Results
A summary of a company's financial performance over a specified period, focusing on revenue, expenses, and net income.
- Compute the net operating income by analyzing different scales of sales, costs, and modifications in sales tactics.
Verified Answer
CK
Cameron KnightJun 28, 2024
Final Answer :
D
Explanation :
Margin of safety in dollars = Total budgeted (or actual)sales - Break-even sales
$100,000 = $400,000 - Break-even sales
Break-even sales = $400,000 - $100,000 = $300,000
Dollar sales to break even = Fixed expenses ÷ CM ratio
$300,000 = Fixed expenses ÷ 0.75
Fixed expenses = $300,000 × 0.75 = $225,000
$100,000 = $400,000 - Break-even sales
Break-even sales = $400,000 - $100,000 = $300,000
Dollar sales to break even = Fixed expenses ÷ CM ratio
$300,000 = Fixed expenses ÷ 0.75
Fixed expenses = $300,000 × 0.75 = $225,000
Learning Objectives
- Compute the net operating income by analyzing different scales of sales, costs, and modifications in sales tactics.
Related questions
How Much Will a Company's Net Operating Income Change If ...
Given the Following Information ...
Twisdale Corporation Manufactures Numerous Products, One of Which Is Called ...
Twisdale Corporation Manufactures Numerous Products, One of Which Is Called ...
Sarratt Corporation's Contribution Margin Ratio Is 73% and Its Fixed ...