1.

Morganti Corporation sells a product for $170 per unit. The product's current sales are 41,800 units and its break-even sales are 33,900 units. What is the margin of safety in dollars?

a. $4,673,821

b. $7,106,000

c. $5,763,000

d. $1,343,000

2.

Carbex, Inc., produces cutlery sets out of high-quality wood and steel. The company makes a standard cutlery set and a deluxe set and sells them to retail department stores throughout the country. The standard set sells for $62, and the deluxe set sells for $77. The variable expenses associated with each set are given below.

	Standard		Deluxe
Production costs	$	16.00	$	31.00
Sales commissions (16% of sales price)	$	9.92	$	12.32

The companys fixed expenses each month are:

Advertising	$	106,000
Depreciation	$	22,000
Administrative	$	63,500

Salespersons are paid on a commission basis to encourage them to be aggressive in their sales efforts. Mary Parsons, the financial vice president, watches sales commissions carefully and has noted that they have risen steadily over the last year. For this reason, she was shocked to find that even though sales have increased, profits for the current monthMayare down substantially from April. Sales, in sets, for the last two months are given below:

	Standard	Deluxe	Total
April	4,100	2,100	6,200
May	1,100	5,100	6,200

Required:

1-a.

Prepare contribution format income statements for April. Round "Total percent" answers to 1 decimal place (i.e .1234 should be entered as 12.3).

1-b.	Prepare contribution format income statements for May. Round "Total percent" answers to 1 decimal place (i.e .1234 should be entered as 12.3).

Carbex, Inc.
Contribution Income Statement for May
	Standard			Deluxe			Total
	Amount	%		Amount	%		Amount	%
			%			%			%
Variable expenses:
			%			%			%
			%			%			%
Total variable expenses	0	0	%	0	0	%	0	0.0	%
	$0	0	%	$0	0	%	$0	0.0	%
Fixed expenses:
Total fixed expenses							0
							$0

3-a.	Compute the break-even point in dollar sales for April. (Round intermediate percentage calculations to 1 decimal place.)

3-b.

Whether the break-even point would be higher or lower with May's sales mix than with Aprils sales mix.

	Higher
	Lower