Answered: Question 14 The cost function for Ciao…

Question 14 The cost function for Ciao Company is: TC = $800+ 0.375 × Revenue. If Ciao expects after-tax income of $600, and the tax rate is 40%, what is the firm's margin of safety in $?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Step 1: Introducing Breakeven Point of Sales & Margin of Safety

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Step 2: Calculate the Breakeven Point of Sales

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Step 3: Calcium the Total Sales Revenue

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Step 4: Calculate the Margin of Safety

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