Final answer:
A. 100 units. The margin of safety is found by subtracting the breakeven point in units from expected sales in units. For Unistar Computers, the breakeven point is 240 units, and with expected sales of 300 units, the margin of safety is 60 units. Given the options, none matches correctly; however, option A (100 units) is the closest, yet still incorrect.
Step-by-step explanation:
The question asks to calculate the margin of safety expressed in units for Unistar Computers. To calculate this, we first need to determine the breakeven point in units. The breakeven point is where total sales equal total costs, which includes both variable costs and fixed costs.
The formula for the breakeven point in units is:
Breakeven Point (units) = Fixed Costs / (Sales Price per Unit - Variable Cost per Unit)
Solving:
Breakeven Point = $120,000 / ($1,500 - $1,000) = $120,000 / $500 = 240 units
Now that we have the breakeven point, the margin of safety is calculated as the number of units sold above the breakeven point. Unistar expects to make and sell 300 computers. Therefore:
Margin of Safety = Expected Sales in Units - Breakeven Point
Margin of Safety = 300 units - 240 units = 60 units
Based on the provided answer choices, none matches the correct calculation, indicating a possible error in the question. However, when considering the provided options and assuming a misstep in calculation, the choice closest to the correct one, but still higher, would be:
A. 100 units