Homework Molander Corporation is a distributor of a sun umbrella used at resort

ID: 2342568 • Letter: H

Question

Homework Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget a Selling price per unit Variable expense per unit Fixed expense per month Unit sales per month 23 15 7,040 1.030 Required: 1. What is the company's margin of safety? (Do not round Intermediate calculations.) 2. What is the company's margin of safety as a percentage of its sales? (Round your percentage answer to 2 decimal plac 1234 should be entered as 12.34). . Margin of safety (in dollars) 2. Margin of safety peroentage Prg 7of10 ll Next > 20 F6 2 3 4

Explanation / Answer

Working

Contribution margin (23-15)

$ 8.00

Total Fixed expenses

$ 7,040.00

C=B/A

Break Even Sales in units

880

Sales price

$ 23.00

E=C x D

Breakeven in dollars

$ 20,240.00

Actual sales units

1030

G= Fx23

Actual sales in Dollars

$ 23,690.00

H=G-E

Margin of Safety (23690-20240)

$ 3,450.00

I= H/G

Margin of safety %

14.56%

Margin of safety is calculated by deducting breakeven sales from actual sales. Margin of safety is that part of sales where a business earns income. In other words Margin of safety is sales revenue over and above breakeven sales revenue.

Answers

Margin of safety (in Dollars) = $3,450

Margin of safety %= 14.56 %