What would happen to a country’s standard of living if people lost faith in the safety of the financial institutions? Explain.
What would happen to a country’s standard of living if people lost faith in the safety of the financial institutions? Explain.
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chp 4 17) Margin of Safety
Comer Company produces and sells strings of colorfulindoor/outdoor lights for holiday display to retailers for $11.98per 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 $483,784 per year.Administrative cost (all fixed) totals $373,226. Comer expects tosell 252,100 strings of light next year.
Required:
1. Calculate the break-even point inunits.
units
2. Calculate the margin of safety inunits.
units
3. Calculate the margin of safety indollars.
$
4. Conceptual Connection: Suppose Comeractually experiences a price decrease next year while all othercosts and the number of units sold remain the same. Would thisincrease or decrease risk for the company? (Hint: Considerwhat would happen to the number of break-even units and to themargin of safety.)
