Question

Vintage Weaponry is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. He is currently producing 40 flintlock muskets per month. Data are as follows: Sales price per unit $800 Variable cost per unit 470 Fixed costs per month 10,230 If Vintage expects to sell 60 units per month, how much is his margin of safety expressed in sales revenue?

Answer 1

$23,200

Step-by-step explanation:

Contribution margin=Sales-Variable cost

=(800-470)=$330

Hence breakeven=Fixed cost/Contribution margin

=(10230/330)=31 units

Total sales=Breakeven sales+margin of safety

Hence MOS=(60-31)=29 units

=(29*800)=$23200