Molander Corporation is a distributor of a sun umbrella used at resort hotels. D

Question

Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the nex month's budget appear below: Selling price Variable expenses Fixed expenses Unit sales $23 per unit $16 per unit $6,090 per month 1,020 units per month Required: 1. Compute the company's margin of safety. (Do not round intermediate calculations.) Margin of safety 2. Compute the company's margin of safety as a percentage of its sales. Round your percentage answer to 2 decimal places (i.e.1234 should be entered as 12.34). Margin of safety

Explanation / Answer

Contribution margin=Sales-Variable cost

=(23-16)=$7 per unit

Hence breakeven sales=Fixed cost/Contribution margin

=(6090/7)=870 units

Margin of safety=Total sales-Breakeven sales

=(1020-870)=150 units

=(150*23)=$3450

MOS%=MOS/Total sale

=(150/1020)=14.71%(Approx).

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