4-29 Margin of SafetyComer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $12.14 per string. The variable costs per string are as follows:Direct materials$1.87Direct labor1.70Variable factory overhead0.57Variable selling expense0.42Fixed manufacturing cost totals $519,988 per year. Administrative cost (all fixed) totals $351,712. Comer expects to sell 206,900 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.)
RECOMMENDED!!ACCOUNTING 2302-Comer Company produces and sells strings of
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