"> (Answered) Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $10.76 per string.... - Tutorials Prime

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(Answered) Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $10.76 per string....


Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $10.76 per string....


Margin of SafetyComer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $10.76 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 expense0.42 Fixed manufacturing cost totals $461,900 per year. Administrative cost (all fixed) totals $292,640. Comer expects to sell 230,500 strings of light next year.Required:1. Calculate the break-even point in units.units2. Calculate the margin of safety in units.units3. 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.)

 


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Jan 02, 2020

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