For Astoria Company , actual sales are $ 11,131,000 , and break-even sales are $ 7,946,000 .
Compute the margin of safety in dollars . Compute the margin of safety ratio .
Expand Your Critical Thinking 18-1
Creative Ideas Company has decided to introduce a new product . The new product can be manufactured by either a capital-intensive method or a labor-intensive method . The manufacturing method will not affect the quality of the product . The estimated manufacturing costs by the two methods are as follows .
Creative Ideas ’ market research department has recommended an introductory unit sales price of $ 36 . The incremental selling expenses are estimated to be $ 562,000 annually plus $ 2 for each unit sold , regardless of manufacturing method .
With the class divided into groups , answer the following . ( a )
Calculate the estimated break-even point in annual unit sales of the new product if Creative Ideas Company uses the : ( 1 ) Capital-intensive manufacturing method . ( 2 ) Labor-intensive manufacturing method .
( b )
Determine the annual unit sales volume at which Creative Ideas Company would be indifferent between the two manufacturing