Comfy Foot buys hiking socks for $5 a pair and sells them for $10. Monthly fixed costs are $25,000 (for sales volumes between 0 and 5,000 pairs), resulting in a breakeven point of 5,000 units. Assume that Comfy Foot has been selling 10,000 pairs of socks per month.
Comty Foot buys hiking socks for $5 a pair and sells them for $10. Monthly fixed costs are $25,D00 (for sales volumes between 0 and 5,000 pairs), resulting In a breakeven point of 5 CO0 unts. Assume that Comty Foot has been seling 10,000 pairs of socks per month. Reaad the rgiements Requirement 1. What is Comty Foot's current margin of safety in units, in sales dollars, and as a percantage? Explain the results. Begin by identifying the: ferma t teocopute the mairgirn of afetly in unils. Margin of safety in units The margin of safety in units is Next, identify the formula to compure tha margin of safety in dolars. Margin of safaty in dallars The margin of safety in dollars isS Now identily the formula to compute the margin of safety as a percentage. Margin of safety 8 a percentage (Round the percentage to the nearest hundredth percent. X.XX%.) The margin of safety percentage is Requirement 2. At this level ofsales, what is y Foot's operating leverage f cor?volume declines by 0% cue to increasing compabbon, by what percentage will the com Begin by identifying the formula to compute the operating leverage fector at the terget level af operating ncome. any's operating income doc ne? - Operatng leverage factor (Round your answer to two decimal places.) The operating leverege factor is (Round the percentage to the nearest hundredth percent, XXX%.) volume decreases 20%, operating income will decrease Requirement 3. Compettion has foroed Comty Foot to lower its sales price to $9 a pair. How wil this affect Comty's breakeven point? (Round your answer up to the naxt whole numbar) Comfy's new brnakaven poin Requirement 4. To compensae for the lower sales price, Comty Foot wants to expand its product line to Include men's dress socks. Each pair will sell for $7.C0 and cost $2.75 from tha suppier. Fixed costs will not change. Comfy expects to sell four pairs of dress socks tor every one paro hdng socks at s new $9 sales pri a what is Comfy s aighted average contribution margin per unt? Nen 1he 41 sales m , how many f ea t peo sock wil t need 10 sell to breakeven? $9 sales prioe). What is coma' the weightad Com Camplsta the frl lawing tanle varaga contribution mar in per unit. Entar all amounts to the nan st cent Hiking socks Dress socks Total Lass: Weighled-average contribulion margin per unit Gven the 4:1 salesmlx, how many of each type of sock will t need to sell to breakeven? Round ony the new target sales in units up to the next whola number. Then round the allocation of hiking and dre55 socks to tha naarest whole number) The new target sales in units ls of dress socks. [ ].m e company will need to sell L ] pairs of the hking socks and I pers
