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What is the company margin of safety in dollars

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Reference no: EM132726543

Question - Red Company prepared the following budget information for the coming year:

Bike A Bike B Bike C

Total Sales $65,000 $1,100,000 $150,000 $1,315,000

Variable expenses 25,000 800,000 80,000 905,000

Contribution margin $40,000 $300,000 $70,000 $410,000

Fixed expense 260,000

Operating income $150,000

The budget assumes the sale of 10,000 units of Bike A, 120,000 units of Bike B, and 70,000 units of Bike C.

INSTRUCTIONS -

a) What is the company's break-even point in sales dollars given the sales mix above?

b) What is the company's break-even point in units given the sales mix above?

c) How many units of each type of bike will be sold at the break-even point?

d) What is the company's margin of safety in dollars?

Reference no: EM132726543

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