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A producer of a single product had the following results for the year just ended: Unit Sales 6,150 units Margin of Safety in Units 263 units Net operating income $ 6,575 How much was fixed cost for the year

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Tundexi

Answer:

Fixed Cost = $147,175

Explanation:

Unit sales = 6,150

Margin of safety unit = 263

Break even unit = Unit sales - Margin of safety unit = 6,150  - 263 = 5887

Net operating income = $6,575

Contribution margin = Net operating income / Margin of safety unit = 6575/263 = $25

Calculation of Fixed cost

6,150 *$25 - Fixed cost = $6,575

$153,750 - Fixed cost = $6,575

Fixed Cost = $153,750 - $6,575

Fixed Cost = $147,175