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: $25 per unit $16 per unit $7,920 per month 1,030 units per Selling price Variable Fixed Unit sales expenses expenses Required: 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=(Sales-Variable costs)

=(25-16)=$9/unit

Hence breakeven=Fixed costs/Contribution margin

=(7920/9)=880 units

1.Total sales=Breakeven sales+MOS

Hence MOS=(1030-880)=150 units

=(150*25)=$3750

2.MOS%=MOS/Total sales

=(150/1030)=14.56%(Approx)

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