Answer:
The margin of safety in dollars amounts to $12,78,000
Explanation:
The margin of safety in dollars is computed as:
Margin of safety in dollars = Total Sales - Break - even Sales
where
Total Sales is computed as:
Total Sales = Units × Price
= 41,400 units × $150 per unit
Total Sales = $6,210,000
Break-even sales is computed as:
Break-even sales = Units × Price
= 32,880 units × $150 per units
Break-even sales = $4,932,000
So, putting the values above:
Margin of safety in dollars = $6,210,000 - $4,932,000
Margin of safety in dollars = $12,78,000
