Perez company makes and sells products with variable costs, Accounting Basics

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Perez company makes and sells products with variable costs

Problem

Perez Company makes and sells products with variable costs of $57 each. Perez incurs annual fixed costs of $30,000. The current sales price is $72.Assume that Perez concludes that it can sell 2,200 units of product for $67 each. Recall that variable costs are $55 each and fixed costs are $24,000. Compute the margin of safety in units and dollars and as a percentage.

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