In May direct labor was 60% of conversion cost. If the manufacturing overhead for the month was $54,000 and the direct materials
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Answer:
The current values for BEp and margin of safety before the proposed changes are:
BEP units: 7,800
in dollars: $ 358,800
Margin of safety:
2,200 units or $ 101,200 of sales
Explanation:
The break even pont is the level of salesthat makes the operating income equal to zero. the margin of safety is the amount above this level at curernt sales.
Contribution per unit: $23
Fixed Cost $179,400
179,400 / 23 = 7,800
In dollars: 7,800 units x $46 each = $ 358,800
Margin of safety:
10,000 - 7,800 = 2,200
in dollars 460,000 - 358,800 = 101,200