Answer:
margin of safety= 50%
Explanation:
Giving the following information:
Selling price per unit, $42.
Unit variable expenses, $14.
Total fixed expenses, $42,000
Actual sales for June, 3,000 units.
The formula for the margin of safety is:
Margin of safety= [(current sales level - break-even point)/current sales level]*100
First, we need to calculate the break-even point
break-even point= fixed costs / contribution margin
break-even point= 42000/(42-14)= 1500 units
margin of safety= (3000 - 1500/3000)*100= 50%
