Help er 5 Seved Molander Corporation is a distributor of a sun umbrella used at

Question

Help er 5 Seved Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below Selling price per unit variable expense per unit Fixed expense per month Unit sales per month $ 24 $ 19 4,400 1,030 Skipped Required: 1. What is the company's margin of safety? (Do not round intermediate calculations.) 2. What is 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).) Hen 1. Margin of safety (in dollars) 2. Margin of safety percentage Print References

Explanation / Answer

1. Break-even units = [$4,400 / ($24 - $19)] = 880 units

Margin of safety in dollars = (1,030 * $24) - (880 * $24) = $3,600

2. Margin of safety percentage = $3,600 / $24,720 = 14.56%

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