Molander Corporation is a distributor of a sun umbrella used at resort hotels. D

Question

Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month's budget appear below Selling price Variable expenses Fixed expenses Unit sales $29 per unit $16 per unit $10,660 per month 970 units per month Required . Compute the company's margin of safety. (Do not round intermediate calculations.) Margin of safety 2. Compute the company's margin of safety as a percentage of its sales. (Round your percentage answer to 2 decimal places (i.e.1234 should be entered as 12.34) Margin of safety

Explanation / Answer

Contribution margin=Sales-Variable expenses

=(29-16)=$13 per unit

Hence breakeven sales=Fixed Cost/Contribution margin

=(10660/13)=820 units

1.Margin of safety=Total sales-Breakeven sales

=(970-820)=150 units

=(150*29)=$4350

2.Margin of safety%=Margin of safety/Total sales

=(150/970)=15.46%(Approx).

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