Question

Data concerning the next month’s budget appear below: Selling price $25 per unit Variable expenses $17 per unit Fixed expenses $6,400 per month Unit sales 950 units per month Required: 1. Compute the company’s margin of safety. (Do not round intermediate calculations.)

Answer 1

margin of safety= 15.79%

In unitos= 150 units

Step-by-step explanation:

Giving the following information:

Selling price $25 per unit Variable expenses $17 per unit Fixed expenses $6,400 per month Unit sales 950 units per month.

Break-even point= fixed costs/ contribution margin

Break-even point= 6400/(25-17)= 800 units

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

margin of safety= (950 - 800)/950= 15.79%

In unitos= 150 units