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Question 4b
Cardio Co manufactures three types of fitness equipment: treadmills (T), cross trainers (C) and rowing machines (R). The budgeted sales prices and volumes for the next year are as follows:
The standard cost card for each product is shown below.
| T | C | R | |
|---|---|---|---|
| Selling price | $1,600 | $1,800 | $1,400 |
| Units | 420 | 400 | 380 |
| T | C | R | |
|---|---|---|---|
| $ | $ | $ | |
| Material | 430 | 500 | 360 |
| Labour | 220 | 240 | 190 |
| Variable overheads | 110 | 120 | 95 |
Labour costs are 60% fixed and 40% variable. General fixed overheads excluding any fixed labour costs are expected to be $55,000 for the next year.
Required:
(b) Calculate the margin of safety in $ revenue for Cardio Co. (3 marks)