Chapter 21, Problem S21.14SE

To determine

Breakeven Point:

The Breakeven point is the level of sales at which the net profit is nil. It can be explained as a situation where the business is generating a sale that is equal to the expenses incurred and hence no profits no loss. Breakeven point in $ is calculated with the help of following formula:

$\text{Breakeven point }\left(\text{units}\right)\text{ = }\frac{\text{Total Fixed Costs}}{\text{(Sales Price Per unit -Variable Cost per unit)}}$

Margin of Safety:

Margin of safety is sales made over and above the breakeven level. The formula for calculation of Margin of safety is as follows:

$\text{Margin of safety in units = Actual Sales units – Breakeven sales units}$

To Determine:

The Margin of safety in units and in Dollar for Funday Park