percentage
Chapter6: Investing And Financing Activities
Section: Chapter Questions
Problem 3.5C
Related questions
Question
What is the percentage for question E?

Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required A Required B
Required C
1. The unit-rate lease?
2. The flat-rate lease?
Required D
Assume an annual volume of 34,500 parts. What is the margin of safety assuming
Note: Round your answers to 1 decimal place.
Margin of Safety
58.0 %
44.1 %
Required E
< Required D
Required E >
Expert Solution

Step 1: Calculating Margin of safety in units
Margin of safety = Actual sales volume- Breakeven sales volume
Actual sales volume = 34,500.
UNIT RATE LEASE OPTION:
As calculated, Breakeven sales volume = 18,225.
So, MOS = 34,500 - 18,225 = 16,275.
FLAT RATE LEASE OPTION:
As calculated, Breakeven sales volume = 19,080
So, MOS = 34,500- 19,080 = 15,420.
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