Calculate the break-even point in units

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Question - Margin of Safety - Comer Company produces and sells strings of colorful indoor/outdoor lights for holiday display to retailers for $10.81 per string. The variable costs per string are as follows:

Direct materials

$1.87

Direct labor

1.70

Variable factory overhead

0.57

Variable selling expense

0.42

Fixed manufacturing cost totals $456,875 per year. Administrative cost (all fixed) totals $336,250. Comer expects to sell 211,400 strings of light next year.

Required -

1. Calculate the break-even point in units.

2. Calculate the margin of safety in units.

3. Calculate the margin of safety in dollars.

4. Conceptual Connection: Suppose Comer actually experiences a price decrease next year while all other costs and the number of units sold remain the same. Would this increase or decrease risk for the company?

Reference no: EM133168477

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