MARGIN OF SAFETY Chase Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $6.28 per string. The variable costs per string are as follows:

Direct materials $1.27 Direct labor 1.58 Variable overhead 0.63 Variable selling 0.17 Fixed manufacturing costs total $231,650 per year. Administrative costs (all fixed)

total $315,390. Chase expects to sell 380,000 strings of light next year.

Required:

. Calculate the break-even point in units.

. Calculate the margin of safety in units.

. Calculate the margin of safety in dollars.

Exercise