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Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger
Edition 4ISBN: 978-0324380767Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger
Edition 4ISBN: 978-0324380767 Exercise 55
Margin of Safety
Yuan Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.42 per string. The variable costs per string are as follows:
Fixed manufacturing cost totals $245,650 per year. Administrative cost (all fixed) totals $301,505. Yuan expects to sell 225,000 strings of light 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. Conceptual Connection: Suppose Yuan 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
Yuan Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $8.42 per string. The variable costs per string are as follows:
Fixed manufacturing cost totals $245,650 per year. Administrative cost (all fixed) totals $301,505. Yuan expects to sell 225,000 strings of light 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. Conceptual Connection: Suppose Yuan 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
Explanation
Verified
Verified
1. Calculate the Contribution per unit: ...
Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger
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