Homework SourseExercise 38 Compute the Margin of Safety LO37 Mohan Corporat
Exercise 3-8 Compute the Margin of Safety [LO3-7]
| Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budget appear below: |
Solution
Contribution margin=Selling price-Variable cost
=(28-13)=$15 per unit
Hence breakeven sales=Fixed expenses/Contribution margin
=(13350/15)=890 units
1.Margin of safety=Total sales-Breakeven sales
(1040-890)=150 units
=(150*28)=$4200
2.Margin of safety%=Margin of safety/Total sales
=(150/1040)=14.42%(Approx).
![Exercise 3-8 Compute the Margin of Safety [LO3-7] Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budge](/WebImages/36/exercise-38-compute-the-margin-of-safety-lo37-mohan-corporat-1109602-1761588067-0.webp "Exercise 3-8 Compute the Margin of Safety [LO3-7] Mohan Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning next month’s budge")
