Heather Hudson makes stuffed teddy bears. Recent information for her business fo

Question

Heather Hudson makes stuffed teddy bears. Recent information for her business follows: Selling price per bear Total fixed cost per month Variable cost per bear $ 27.00 2,660.00 7.00 If she sells 283 bears next month, determine the margin of safety in units, sales dollars, and as a percentage of sales. (Round your intermediate calculations to the nearest whole number and round your "Percentage of Sales" answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%.)) Margin of Safety (Units) Margin of Safety (Dollars) Percentage of Sales

Explanation / Answer

Contribution margin=Sales-Variable costs

=(27-7)=$20

Hence breakeven=(Fixed cost/Contribution margin)

=(2660/20)=133 bears

Total sales=Breakeven sales+MOS

MOS(283-133) 150 units MOS($)(150*27) $4050 % of Sales(MOS/Sales)(150/283) 53.00%(Approx).

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