Margin of Safety Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable co cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Margin of Safety
Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed
cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 2,000.
Required:
1. Calculate the margin of safety in terms of the number of units.
units
2. Calculate the margin of safety in terms of sales revenue.
$
Transcribed Image Text:Margin of Safety Chillmax Company plans to sell 3,500 pairs of shoes at $60 each in the coming year. Unit variable cost is $21 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 2,000. Required: 1. Calculate the margin of safety in terms of the number of units. units 2. Calculate the margin of safety in terms of sales revenue. $
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