16 lamar has the following data selling price 40 variable...

16. Lamar has the following data: Selling Price $ 40 Variable manufacturing cost $ 22 Fixed manufacturing cost $ 150,000 per month Variable selling & administrative costs $ 6 Fixed selling & administrative costs $ 120,000 per month If Lamar produces and sells 30,000 units, what is the margin of safety in units?

Transcript

00:01 So in the given question we need to find out the margin of safety for lamar.

00:05 Now, first of all, we are going to find out what is the contribution margin per unit.

00:12 So the step one is going to be contribution margin calculation.

00:33 Now in the question, we have been given with the selling price.

00:36 So the selling price and the question given is 40.

00:42 So selling price is equal to 40.

00:45 Now with this selling price if we subtract the total variable cost per unit then we are going to get our contribution margin per unit.

00:56 So total variable cost per unit.

01:06 So we have two types of variable cost in the question.

01:11 The number one is variable manufacturing cost.

01:14 So variable manufacturing cost.

01:24 Now this is given to be 22 per unit.

01:29 And the second variable cost is variable selling and administrative cost.

01:34 So we will put that cost also variable selling and administrative cost.

01:47 So this is given to be 6 per unit.

01:50 So this total becomes 28.

01:52 So this 28 has to be subtracted from the sales price.

01:57 Then finally, the balance that remains is 12 and this is the contribution margin per unit.

02:04 So contribution margin per unit.

02:15 Now after calculating the contribution margin per unit, the next thing that we will be doing, that is step 2 is the calculation of total fixed cost.

02:34 Now in the question, the first fixed cost given to us is fixed manufacturing cost...

Question

Please give Ace some feedback