Question

Molander Corporation is a distributor of a sun umbrella used at resort hotels. Data concerning the next month’s budget appear below:

Selling price per unit	$	25
Variable expense per unit	$	18
Fixed expense per month	$	6,020
Unit sales per month		1,010

Required:

1. What is the company’s margin of safety (in dollars)? (Do not round intermediate calculations.)

2. What is the company’s margin of safety as a percentage of its sales? (Round your percentage answer to 2 decimal places (i.e. .1234 should be entered as 12.34).)

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Engberg Company installs lawn sod in home yards. The company’s most recent monthly contribution format income statement follows:

	Amount			Percent of Sales
Sales	$	142,000		100	%
Variable expenses		56,800		40	%
Contribution margin		85,200		60	%
Fixed expenses		20,000
Net operating income	$	65,200

Required:

Construct a new contribution format income statement for the company assuming a 29% increase in sales.

Answer 1

Thank you.

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