Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $12.55 per string. The variable costs per string are as follows: Direct materials $1.87 Direct labor 1.70 Variable factory overhead 0.57 Variable selling expense 0.42 Fixed manufacturing cost totals $580,074 per year. Administrative cost (all fixed) totals $430,661. Comer expects to sell 240,700 strings of light next year. Required: 1. Calculate the break-even point in units. x units 2. Calculate the margin of safety in units. units 3. Calculate the margin of safety in dollars. 4. Conceptual Connection: Suppose Comer 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.) Increase
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
