Calculating Margin of Safety
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Swimkids is a swimsuit manufacturer. They sell swim suits at a selling price is $30 per unit. Swimkids variable costs are $18 per unit. Fixed costs are $86,500. Swimkids expects sales of $265,300 next year. What is Swimkids's margin of safety?
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Solution Summary
The solution shows a detailed procedure of calculating margin of safety through breakeven analysis.
Solution Preview
The formula of margin of safety is as follows:
Margin of Safety = Expected Sales - Breakeven sales
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