Chapter 5 Help Exercise 5-8 Compute the Margin of Safety [LO5-7) Molander Corpor

Question

Chapter 5 Help Exercise 5-8 Compute the Margin of Safety [LO5-7) Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data c t resort hotels. Data concerning the next month's budget appear below oncerning the next Selling price per unit s 27 Unit salesonth 1,050 Required: 1. What is the company's margin of safety? (Do not round intermediate calculations) 2 What is the company's marin of safety as a percentage of is sales? (Round your percentage answer to 2 decimal places (ie. 1234 should be entered as 12.34).) 1. Margin of safety (n dollars) Margin of sarlety percentage

Explanation / Answer

Molander Corporation Units sold 1050 Selling Price per unit $          27.00 Variable cost per units $          14.00 Contribution Margin per unit=Selling Price per unit-Variable cost per unit=($27-$14) $          13.00 Fixed cost $ 11,700.00 Actual Sales=(1050*$27) $ 28,350.00 Breakeven Sales(Units)=(Fixed Cost/Contribution Margin ) 900 Breakeven Sales (In dollars)=(900*$27) $ 24,300.00 1) Margin of Safety(In dollars)=($28350-$24300) $    4,050.00 2) Margin of safety(Percentage)=Margin of Safety in dollars/Actual Sales=($4050/$28350)*100 14.29%

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