Answer:
The margin of safety in dollars is $611,200 and the margin of safety percent is 32%
Explanation:
In order to calculate the margin of safety in dollars and as a percent of expected sales If the company expects sales of 10,000 units we would have to calculate the following:
margin of safety in dollars=Margin of Safety units*sold price
sold price=$191 per unit
Margin of Safety units = Sales - Breakeven units
sales=10,000 units
Breakeven units
= Fixed cost/Contribution margin per unit
B
reakeven units= $455,600/($191-$124) =
B
reakeven units= 6800
Margin of Safety units =10,000 - 6.800
Margin of Safety units =3,200
Therefore, Margin of Safety in dollars = 3,200*$191
Margin of Safety in dollars =$611,200
Margin of Safety percent=Margin of Safety units/sales
Margin of Safety percent= 3,200/10,000
Margin of Safety percent=32%
The margin of safety in dollars is $611,200 and the margin of safety percent is 32%
