Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. margin of safety comer company produces and sells

Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday...

90.2K

Verified Solution

Question

Accounting

Margin of Safety

Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.12 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 $245,650 per year. Administrative cost (all fixed) totals $297,606. Comer expects to sell 225,000 strings of lights next year.

Required:

1. Calculate the break-even point in units. fill in the blank 1 units

2. Calculate the margin of safety in units. fill in the blank 2 units

3. Calculate the margin of safety in dollars. $fill in the blank 3

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.)

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!
Become a Member

Other questions asked by students