he company considers renovating its operations by purchasing a new machine that would reduce variable expenses by $7.20 per unit. However, fixed expenses would increase to a total of $544,320 each month. Using the new machine would not cause a change in monthly sales quantity or price per unit. What would the company's margin of safety in dollars be if it purchases and uses the new machine

Question Completion:

Morton Corporation

Income Statement for the most recent month

Sales revenue (42,000 units * $24 per unit) $1,008,000

Variable cost of goods sold                                 705,600

Contribution margin                                          $302,400

Fixed expenses                                                    241,920

Net operating income                                         $60,480

Morton Corporation

The company's margin of safety in dollars would be $100,800 if it purchases and uses the new machine.

Explanation:

a) Data and Calculations:

Morton Corporation

Income Statement for the most recent month

Sales revenue (42,000 units * $24 per unit) $1,008,000

Variable cost                                                        705,600

Contribution margin                                          $302,400

Fixed expenses                                                    241,920

Net operating income                                         $60,480

After the renovation of operations:

Variable cost of goods sold will reduce by $7.20 per unit

Variable cost per unit before renovation = $16.80 ($705,600/42,000)

New Variable cost per unit after renovation = $9.60 ($16.80 - $7.20)

New contribution margin per unit = $14.40 ($24 - $9.60)

Contribution margin ratio = 0.60 or 60%

New total fixed expenses = $544,320

Break-even point in sales dollars = Fixed expenses/Contribution margin ratio

= $544,320/0.60

= $907,200

Margin of safety = Sales revenue - Break-even Sales Dollars

= $100,800 ($1,008,000 - $907,200)

answer: marginal utility of the fourth brownie is 0.

explanation: marginal utility is the addtional utility gained from the consumption of one more unit of a good. it is given by,

so, marginal utility at the 4th unit will be given by

since, the values are not given here, you can simply find marginal utility at fourth unit by subtracting total utility at 3rd unit from total utility at 4th unit.