Question

The manager at​ Tom's Taxidermy expects to sell 1,000 units at $70 each unit. In order for the manager to​ breakeven, the manager must sell100 units.

What is the margin of safety in​ dollars?
A.$63,000
B.$75,900
C.$70,000
D.$ 77,000

Answer 1

A.$63,000

Step-by-step explanation:

The margin of safety is defined as the difference between the actual sales volume and the breakeven volume.

In this case, Tom's Taxidermy expects to sell 1,000 units at $70 each and their breakeven volume is 100 units, the margin of sales, in dollars, is:

`MS = (1,000-100)*\$70\\MS=\$63,000`

The answer is A.$63,000.