Margin of Safety and Break-Even Points
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A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its MARGIN OF SAFETY is:
A) $32,000
B) $96,000
C) $128,000
D) $192,000
Borich Corp. produces and sells a single product. Data concerning that product appear below:
Selling price per unit............$150.00
Variable expenses per unit........$73.50
Fixed expenses per month..........$308,295
The break-even in monthly UNIT sales is closest to:
A) 2,055
B) 4,030
C) 4,194
D) 3,426
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Solution Summary
This solution provides calculations for margin of safety and break-even in monthly unit sales.
Solution Preview
Answer: A)$32,000
Total sales - Break even sales
Total sales - Fixed costs/COntribution margin
$224000 - $192000
Borich ...
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