1 answer

QUESTION 4 A Company sells a marble slab for $1,100. Fixed costs are $33,000, while the...

Question:

QUESTION 4 A Company sells a marble slab for $1,100. Fixed costs are $33,000, while the variable costs are $550 per slab. The
QUESTION 4 A Company sells a marble slab for $1,100. Fixed costs are $33,000, while the variable costs are $550 per slab. The month. What is the margin of safety assuming 85 slabs are actually sold? (Round interim calculations and final calc $168,000 $59,500 $27,500 $43,000

Answers

Answer:
Selling price per unit = $1,100
Variable cost per unit = $550

Contribution Margin per unit = Selling price per unit - Variable cost per unit
Contribution Margin per unit = $1,100 - $550
Contribution Margin per unit = $550

Contribution Margin ratio = Contribution Margin per unit / Selling price per unit * 100
Contribution Margin ratio = $550 / $1,100 * 100
Contribution Margin ratio = 50%

Break Even Sales = Fixed Cost / Contribution Margin ratio
Break Even Sales = $33,000 / 0.50
Break Even Sales = $66,000

Current Sales = 85 * $1,100
Current Sales = $93,500

Margin of Safety (in Dollar) = Current Sales – Break Even Sales
Margin of Safety (in Dollar) = $93,500 - $66,000
Margin of Safety (in Dollar) = $27,500

.

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