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 $28 per unit $13 per unit $12,150 per month 960 units per month 1. 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=Selling price-Variable expenses

=(28-13)=$15 per unit

Hence breakeven point=Fixed cost/Contribution margin

=(12150/15)=810 units

1.Margin of safety=Total sales-Breakeven sales

=(960-810)=150 units

=(150*$28)=$4200

2.MOS%=Margin of safety/Total sales

=(150/960)=15.63%(Approx).

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