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$23 Variable expense per unit$15 Fixed expense per month$7,040 Unit sales per month 1,030 Required: 1. What is the company’s margin of safety? (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. 0.1234 should be entered as 12.34).)

Margin of safety= 150 untis

Margin of safety ratio= 15%

Explanation:

Giving the following information:

Selling price per unit $23

Variable expense per unit $15

Fixed expense per month $ 7,040

Unit sales per month 1,030

First, we need to calculate the break-even point in units:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 7,040 / (23 - 15)

Break-even point in units= 880

Now,  the margin of safety in units and as a percentage:

Margin of safety= (current sales level - break-even point)

Margin of safety= 1,030 - 880

Margin of safety= 150 untis

Margin of safety ratio= (current sales level - break-even point)/current sales level

Margin of safety ratio=  150/1,030

Margin of safety ratio= 0.146

Margin of safety ratio= 15%

In indirect competition, this involves two or more businesses that provide different kinds of products and services but may satisfy the need of the same consumers. In Regina's case, indirect competition is significant because even though they have different products, this would still satisfy the same customer. The answer is option C.