Margin of Safety

Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $17.42 per string. The variable costs per string are as follows:

Direct materials$1.87

Direct labor1.70

Variable factory overhead0.57

Variable selling expense0.42

Fixed manufacturing cost totals $964,500 per year. Administrative cost (all fixed) totals $666,148. Comer expects to sell 220,200 strings of light next year.

Required:

1.Calculate the break-even point in units.

units

2.Calculate the margin of safety in units.

units

3.Calculate the margin of safety in dollars.

$