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Calculate the margin of safety in dollars

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Reference no: EM132871497

Problem - Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.12 per string. The variable costs per string are as follows: Fixed manufacturing cost totals $245,650 per year. Administrative cost (all fixed) totals $297,606. Comer expects to sell 225,000 strings of lights next year.

Required -

1. Calculate the break-even point in units.

2. Calculate the margin of safety in units.

3. Calculate the margin of safety in dollars.

4. 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?

Reference no: EM132871497

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