Margin of Safety

Comer Company produces and sells strings of colorful indoor$/$outdoor lights for holiday display to retailers for $$13\mathrm{.}42$ per string. The variable costs per string are as follows:

Direct materials $$1\mathrm{.}87$

Direct labor $1\mathrm{.}70$

Variable factory overhead $0\mathrm{.}57$

Variable selling expense $0\mathrm{.}42$

Fixed manufacturing cost totals $$635,262$ per year. Administrative cost $($all fixed$)$ totals $$416,420.$ Comer expects to sell $203,600$ strings of light next year.

Required:

$1.$ Calculate the break$-$even point in units.

fill in the blank $1$

units

$2.$ Calculate the margin of safety in units.

fill in the blank $2$

units

$3.$ Calculate the margin of safety in dollars.

$fill in the blank $3$

$4.$ Conceptual Connection: Suppose Comer actually experiences a price decrease next year while all other costs and the number of units sold remain the same. Would this increase or decrease risk for the company? $($Hint: Consider what would happen to the number of break$-$even units and to the margin of safety.$)$