Question
Fun Foot buys hiking socks for $8 a pair and sells them for $10. Monthly fixed costs are $15,000 (for sales volumes between 0
Fun Foot buys hiking socks for $8 a pair and sells them for $10. Monthly fixed costs are $15,000 (for sales volumes between 0 and 6,000 pairs), resulting in a breakeven point of 7,500 units. Assume that Fun Foot has been selling 10,000 pairs of socks per month Read the requirements Requirement 1. What is Fun Foot's current margin of safety in units, in sales dollars, and as a percentage? Explain the results Begin by identifying the margin of safety in units, then in sales dollars and finally as a percentage The margin of safety in units is The margin of safety in dollars is (Round the percentage to the nearest hundredth percent, XXX%) The margin of safety percentage is Requirement 2. At this level of sales, what is Fun Foot's operating leverage factor? If volume declines by 11% due to increasing competition, by what percentage will the company's operating income decline?
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