Little Boat Inc. (LBI) manufactures only one model of row boat, the Bunny.

It is well known in the boating industry for its high safety standards and durability. It has become a very popular row boat for beginners. It comes in Blue, green, and Yellow. It is a very good product and was recently endorsed by Captain Highliner.

This year, LBI expects to make and sell 21,400 Bunnies. It is expected to be a very good year due to the latest fad of people taking individual rowing trips and social distancing. Fixed administrative costs are expected to total $480,000 and fixed manufacturing costs are expected to total $279,000. Financial information relating to the product for this year is provided below.

Financial details per unit:

Selling price	$529
Variable selling cost	37
Variable overhead cost	29
Direct labour cost	125
Direct material cost	261

Required: 

Calculate LBI's expected margin of safety in units for this year.

Answer rating: 100% (QA)

To calculate LBIs expected margin of safety in units for this year we ne... View the full answer