Question

Awanita Enterprises sells computer flash drives for​ $3.16 per unit. Unit variable cost is​ $0.06. The breakeven point in units is​ 3,600, and expected sales in units are​ 4,300. What is the margin of safety in​ dollars?

Answer 1

Margin of safety= $2,212

Step-by-step explanation:

Giving the following information:

Selling price per unit= $3.16

The breakeven point in units is​ 3,600, and the expected sales in units are​ 4,300.

The margin of safety is calculated using the following formula:

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

Current sales level= 4,300*3.16= $13,588

Break-even point dollars= 3,600*3.16= 11,376

Margin of safety= 13,588 - 11,376= $2,212