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Margin of safety Organic Health Care Products Inc expects to maintain the same inventories at the end of 2048 as at the beginning of the

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Margin of safety Organic Health Care Products Inc expects to maintain the same inventories at the end of 2048 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during 2078. A summary report of these estimates is as follows: Estimated Variable Cost Estimated Fixed cost (per unit sold) Production costs: Direct materials $ 8.00 Direct labor 3.00 Factory overhead $ 200,000 1.50 Selling expenses! Advertising 1,450,000 Sales salaries and commissions 93 000 1.85 Travel 340,000 - 2,000 0.10 Miscellaneous selling expense Administrative expenses: Office and officers' salaries 300.000 10.000 0.50 Supplies Direct labor Factory overhead 3.00 $ 200,000 Selling expenses: 1.50 Advertising 1,450,000 Sales salaries and commissions 93,000 1.85 Travel 340,000 Miscellaneous selling expense 2,000 0.10 Administrative expenses: office and officers' salaries 300,000 Supplies 10,000 0.50 Miscellaneous administrative expense 5,000 0.05 Total $2,400,000 It is expected that 400,000 units will be sold at a price of $25 a unit. Maximum sales within the late ranice are 500.000 units. Determine the following based upon the estimates for 2018: 1. Margin of safety for 2018 in units of sales 160,000 units 2. Margin of safety for 2018 in dollars of sales. 4,000,000 40 98 3. Margin of safety for 2088 expressed as a percentage of sales. $15.00

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