Theodora Patel makes stuffed teddy bears. Recent information for her business fo

Question

Theodora Patel makes stuffed teddy bears. Recent information for her business follows:


Selling price per bear--------------$25.00
Total fixed cost per month--------1,500.00
Variable cost per bear--------------15.00

1. If she sells 275 bears next month, determine the margin of safety in number of units, sales dollars, and percentage of sales. (Round your answers to 1 decimal place. Omit the "$" & "%" signs in your response.)

Margin of safety (units):__________bears
Margin of safety (dollars):$__________
Percentage of sales:__________%

Explanation / Answer

Contribution per unit = 25 - 15 = $10 Breakeven in units = 1500/10 = 150 bears Margin of safety in units = 275 - 150 = 125 units Margin of safety in dollars = 125 x 25 = $3125 Percentage of sales = 3125/(275 x 25) x 100 = 45.45 % Hope this helps!

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