Margin of Safety a. If Canace Company, with a break-even point at $548,100 of sales, has actual sales of $870,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 321,900 2. 37 % b. If the margin of safety for Canace Company was 25%, fixed costs were $1,635,000, and variable costs were 75% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $ 8,175,000 X Feedback Check My Work a. (Sales minus sales at break-even) divided by sales equals margin of safety. b. Sales minus variable costs equals contribution margin. Fixed costs divided by unit contribution margin equals break-even point. (Sales minus sales at break-even) divided by sales equals margin of safety. Break-Even Sales and Sales Mix for a Service Company Zero Turbulence Airline provides air transportation services between Los Angeles, California; and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics: Fuel $14,941 Flight crew salaries 11,444 Airplane depreciation 5,405 Variable cost per passenger-business class 50 40 Variable cost per passenger-economy class Round-trip ticket price-business class 510 Round-trip ticket price-economy class 310 It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight. If required round the answers to nearest whole number. a. Compute the break-even number of seats sold on a single round-trip flight for the overall product, E. Assume that the overall product is 10% business class and 90% economy class seats. Total number of seats at break-even 43 X seats b. How many business class and economy class seats would be sold at the break-even point? Business class seats at break-even 4 X seats Economy class seats at break-even 39 X seats Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $328,600, and the sales mix is 30% bats and 70% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $40 $30 Gloves 100 60 a. Compute the break-even sales (units) for both products combined. units