Margin of SafetyChillmax 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 fixedcost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 2,000.Required:1. Calculate the margin of safety in terms of the number of units.units2. Calculate the margin of safety in terms of sales revenue.$

MARGIN OF SAFETYSales Above the Break-Even Point is Called Margin of Safety Sales.Margin of Safety…

Answered: Margin of Safety Chillmax Company plans…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Margin of Safety Head-First Company plans to sell 5,180 bicycle helmets at $72 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 1,833. 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.
Pam-Tees Company plans to sell 11,000 T-shirts at $15 each in the coming year. Product costs include: Direct materials per T-shirt $4.75 Direct labour per T—shirt $2.25 Variable overhead per T- shirt $0.50 Total fixed factory overhead $32,000 Variable selling expense is the redemption of a coupon, which averages $0.70 per T-shirt; ﬁxed selling and administrative expenses total $17,000. Required: Calculate the: 1. Variable product cost per unit 2. Contribution margin ratio (rounded to four signiﬁcant digits) 3. Total ﬁxed expense for the year 4. Break Even point in quantity (Q) 5. Margin of Safety in Quantity (Q)
Braile Gear Works sells a single gear for a price of $55.00 per unit. The variable costs of the gear are $23.00 per gear and annual fixed costs are $448,000. The cost analyst tells you that, based on the price and cost information of the gear and the marketing department's sales projection for next year, the margin of safety percentage is 30 percent. How many units does marketing expect to sell next year? Note: Do not round intermediate calculations.
Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $12.41 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 $551,855 per year. Administrative cost (all fixed) totals $419,190. Comer expects to sell 247,000 strings of light next year. Required: 1. Calculate the break-even point in units.fill in the blank 1 units 2. Calculate the margin of safety in units.fill in the blank 2 units 3. Calculate the margin of safety in dollars.$fill in the blank 3
Super Sales Company is the exclusive distributor for a high-quality knapsack. The product sells for $100 per unit and has a CM ratio of 40% The company's fixed expenses are $459,000 per year. The company plans to sell 12,000 knapsacks this year. Required: 1. What are the variable expenses per unit? Variable expenses per unit 2. Use the equation method for the following e. What is the break-even point in units and in sales dollars? Break-even point in units Break-even point in sales dollars b. What sales level in units and in sales dollars is required to earn an annual profit of $99,000? Sales in units Sales in dollars c. What sales level in units is required to earn an annual after-tax profit of $99,000 if the tax rate is 25%? Sales in units d. Assume that through negotiation with the manufacturer, Super Sales Company is able to reduce its variable expenses by $5 per unit. What is the company's new break-even point in units and in sales dollars? (Do not round Intermediate calculations.…
A manufacturer of ovens sells them for $1,370.00 each. The variable costs are $1,020.00 per unit. The manufacturer's factory has annual fixed costs of $2,460,000.00. Given the expected sales volume of 3,700 units for this year, what will be this year's net income? Round to two decimal places
Variable Cost Ratio, Contribution Margin Ratio 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). Fixed factory overhead is $30,000 and fixed selling and administrative expense is $48,000. Required: 1. Calculate the variable cost ratio. % 2. Calculate the contribution margin ratio. 3. Prepare a contribution margin income statement based on the budgeted figures for next year. In a column next to the income statement, show the percentages based on sales for sales, total variable cost, and total contribution margin. Enter amounts as positive numbers. Chillmax Company Contribution Margin Income Statement For the Coming Year Percent of Sales Sales Total variable cost Total contribution margin Total fixed cost Operating income
ABC Company sells a product for $100 per unit. Variable costs are $60 per unit, and fixed costs are $3,000 per month. The company expects to sell $600 units in September using the contribution margin format. In the income statement for September using the Contribution Margin Format, the Contribution Margin is and the Operating Income is_ O $20,000 and $22,000 O $22,000 and $19,000 O $24,000 and $21,000 O $23,000 and $20,000 O $21,000 and $18,000

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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 co cost equals $78,000 (includes fixed factory overhead and fixed selling and administrative expense).