What would Best Wholesale’s target margin of safety be in units? What would Best Wholesale’s target margin of safety be in dollars?
4. Best Wholesale recently calculated their break-even point for their Midwest operations.
Current
Units sold 1,200
Sales price per unit $750
Variable cost per unit $575
Contribution margin per unit $175
Fixed costs $96,250
Break-even (in units) 550
Contribution margin ratio 23.33%
Break-even (in dollars) $412,500
NOTE #2: Units are whole numbers with commas as needed (i.e. 1,234). All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345).
If the national sales manager has asked them to include a $10,500 margin of safety in their calculations:
What would Best Wholesale’s target margin of safety be in units?
What would Best Wholesale’s target margin of safety be in dollars?
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