Cartman Company makes a Cheezy-poofs that sells for $5 a bag. Each bag has a variable cost of $1. Cartman has a total fixed costs of $7,200. At budgeted sales of $30,000. What is the margin of safety (in percentage)?

9(B). ABC Corporation recently noticed an increase in its fixed cost. All other costs and

revenues were unchanged. What impact will this have on break-even point and the margin of safety (increase, decrease, or stay the same and why? feel free to make-up numbers to help explain why.

Breakeven: _________________ Why:_______________________________________________________________

Margin of Safety: _________________ Why:_______________________________________________________________

10. Chef Company makes and sells pre-packed lunches. The variable cost of each lunch is $5. The lunches are sold for $10 each. Fixed operating expenses amount to $10,000. Using the space below, prepare a break-even graph. Indicate the following on the graph: (a) fixed cost, (b) total cost, (c) total revenue, (d) loss, (e) breakeven point, and (f) profit area.