Required d: Assume monthly volume of 27,000 units. What is the margin of safety percentage assuming: 1. The unit-rate lease? 2. The flat-rate lease? Complete this question by entering your answers in the tab below. Assume monthly volume of 27,000 units. What is the margin of safety percentage assuming: (Round your answers to 1 decimal place.)
Canton Corp. produces a part using an expensive proprietary machine that can only be leased. The leasing company offers two contracts. The first (unit-rate lease) is one where Canton would pay $18 per unit produced, regardless of the number of units. The second lease option (flat-rate lease) is one where Canton would pay $270,000 per month, regardless of the number produced. The lease will run one year and the lease option chosen cannot be changed during the lease. All other lease terms are the same.
The part sells for $180 per unit and unit variable cost (excluding any machine lease costs) are $90. Monthly fixed costs (excluding any machine else costs) are $486,000.
Required d:
Assume monthly volume of 27,000 units. What is the margin of safety percentage assuming:
1. The unit-rate lease?
2. The flat-rate lease?
Complete this question by entering your answers in the tab below.
Assume monthly volume of 27,000 units. What is the margin of safety percentage assuming: (Round your answers to 1 decimal place.)
Margin of Safety
1. The unit-rate lease ? %
2. The flat-rate lease ? %
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