Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the nextmonth’s budget appear below:Selling price ..................................... $30 per unitVariable expenses ........................... $20 per unitFixed expenses ............................... $7,500 per monthUnit sales ......................................... 1,000 units per monthRequired:1. Compute the company’s margin of safety.2. Compute the company’s margin of safety as a percentage of its sales.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next
month’s budget appear below:
Selling price ..................................... $30 per unit
Variable expenses ........................... $20 per unit
Fixed expenses ............................... $7,500 per month
Unit sales ......................................... 1,000 units per month
Required:
1. Compute the company’s margin of safety.
2. Compute the company’s margin of safety as a percentage of its sales.
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