Margin of Safety

Comer Company produces and sells strings of colorful indoor$/$outdoor lights for holiday display to retailers for $$8\mathrm{.}25$ per string. The variable costs per string are as follows:

Direct materials

Direct labor

Variable factory overhead

Variable selling expense

$$1\mathrm{.}87$

$1\mathrm{.}70$

$0\mathrm{.}57$

$0\mathrm{.}42$

Fixed manufacturing cost totals $$243,909$ per year. Administrative cost $($all fixed$)$ totals $$174,168.$ Comer expects to sell $207,700$ strings of light next year.

Required:

Calculate the break$-$even point in units.

units

Calculate the margin of safety in units.

units

Calculate the margin of safety in dollars.

$

the number of break$-$even units and to the margin of safety.$)$

$$ Check My Work

Break$-$Even Units $=$ Fixed Cost $\frac{?}{?}$ Contribution Margin per Unit

The margin of safety is the units sold or the revenue earned above the break$-$even volume.

Margin of Safety in Units $=$ Sales in Units $-$ Break$-$Even Units

Margin of Safety in Sales Revenue $=$ Sales $-$ Break$-$Even Sales

Review the "How to Calculate the Break$-$Even Point in Units" and "How to Calculate the Margin of Safety" examples in your text.