Margin of Safety Ciganda Company produces and sells strings of colorful indoor/outdoor lights for holiday...
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Margin of Safety Ciganda Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.10 per string. The variable costs per string are as follows: Fixed manufacturing cost totals $245,650 per year. Administrative cost (all fixed) totals $237,950. The company expects to sell 225,000 strings of lights next year. Required: 1. Calculate the break-even point in units. units 2. Calculate the margin of safety in units. units 3. Calculate the margin of safety in dollars. $ 4. Conceptual Connection: Suppose Ciganda actually experiences a price decrease next year, while all other costs and the number of units sold remain the same. Would this increase or decrease risk for the company? (Hint: Consider what would happen to the number of break-even units and to the margin of safety.)
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Margin of Safety Ciganda Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.10 per string. The variable costs per string are as follows: Fixed manufacturing cost totals $245,650 per year. Administrative cost (all fixed) totals $237,950. The company expects to sell 225,000 strings of lights next year. Required: 1. Calculate the break-even point in units. units 2. Calculate the margin of safety in units. units 3. Calculate the margin of safety in dollars. $ 4. Conceptual Connection: Suppose Ciganda actually experiences a price decrease next year, while all other costs and the number of units sold remain the same. Would this increase or decrease risk for the company? (Hint: Consider what would happen to the number of break-even units and to the margin of safety.) 