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

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Accounting

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Margin of Safety Comer Company produces and sells strings of colorful Indoor/outdoor lights for holiday display to retailers for $12.78 per string. The variable costs per string are as follows: Direct materials $1.87 Direct labor 1.70 0.57 0.42 Variable factory overhead Variable selling expense Fixed manufacturing cost total $586,908 per year. Administrative cast (all fived) totals $123.330. Comer expects to sell 204,900 strings of light next year. Required: 1. Calculate the break-even point in units 71,400 X units 2. Calculate the margin of safety in units units 3. Calculate the margin of safety in dollars. 2,618,622 x 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.)

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