Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $15.38 per string. The variable costs per string are as follows: Direct materials $1.87 Direct labor 1.70 Variable factory overhead 0.57 Variable selling expense 0.42 Fixed manufacturing cost totals $740,088 per year. Administrative cost (all fixed) totals $570,214. Comer expects to sell 226,700 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.)

Margin of Safety Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $15.38 per string. The variable costs per string are as follows: $1.87 1.70 Direct materials Direct labor Variable factory overhead Variable selling expense 0.57 0.42 Fixed manufacturing cost totals $740,088 per year. Administrative cost (all fixed) totals $570,214. Comer expects to sell 226,700 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. SI 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.)