Reference no: EM132960011

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.

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.