Calculate margin of safety in dollars and percentage terms

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Reference no: EM132562723

Question - Assume that James has discovered a new kind of wood that would improve the quality of his shelves. Fixed costs remain the same ($24,000 per year) but the following costs are changed:

Material costs increase by 20%

Labour costs increase to 2 hrs @ $30 per hour

James also increased the selling price to $280 per shelf.

Required -

1. Calculate the new breakeven point per year (in units)?

2. Calculate the margin of safety in dollars and percentage terms, given that the current sales volume of 500 shelves per year.

Reference no: EM132562723

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