Duncan Enterprises is considering building a new plant in Canada. They predict sales at the new plant to be 50,000 units at $10.00/unit. Below is a listing of estimated expenses:
Category | Total Annual Expenses | % of Annual Expense that are Fixed |
Materials | $50,000 | 10% |
Labour | $90,000 | 20% |
Overhead | $40,000 | 30% |
Marketing/Admin | $20,000 | 50% |
A Canadian firm was contracted to sell the product and will receive a commission of 20% of the sales price. No U.S. home office expenses will be allocated to the new facility.
The margin of safety percentage for Duncan Enterprises is
◦ 118.37%.
◦ 94.04%.
◦ 81.63%.
◦ 18.37%.