Reference no: EM132959188

Question - Campus Bagels bakes and sells authentic New York-style kettle-boiled bagels. For the most recent year, Campus Bagels sold 160,000 bagels at a selling price of $1 per bagel. During this same year, Campus Bagels incurred fixed costs of $75,000 and variable costs of $0.25 per bagel.

Management of Campus Bagels is considering extending their product line to include bagel sandwiches. Management plans on selling each bagel sandwich for $4. At this price, they estimate selling four bagels for each bagel sandwich. Moreover, the variable cost per bagel sandwich would be $1.25 and the decision would increase Campus Bagels' total fixed costs by $27,350 per year.

Required - For the most recent year (with just the bagel sales), what was Campus Bagels' Margin of Safety? With just the bagel sales, at what sales level would Campus Bagels attain a Margin of Safety of 100%? Can Campus Bagels achieve this Margin of Safety? Explain.