SnuggleBug Co. plans to launch an adult onzie line. They need to figure out the margin of safety for this limited time offer, and they are afraid of risk on this one. They hope to get a foot in the market, and to fund future onzie lines from this line; aiming for $600,000 in Net income after tax of 25%. You have been hired to do the accounting, and they want to see if they can sleep well tonight, knowing this venture will do well.

- Sales are expected to be around $70 per onzie.

- Costs for fabric, sewing, and buttons will be $25.

- Costs for maintaining the sewing machines, regardless of onzies made, are $60,000.

- Costs for paying seamstress' do not change with onzies made, and are $200,000.

- There will be room to create 5,000 onzies in a year at CuddleBug's current premisis.

Please tell SnuggleBug what their BEQ (5 marks), Margin Of Safety (2 marks), and Target Revenue/Q will be (8 marks)

Can they sleep tight tonight? Comment on the situation, and tell the management what to expect. (4 marks)