Question

Gould Enterprises sells computer disks for $1.50 per disk. Unit variable expenses total $0.90. The breakeven sales in units are 3,000 and budgeted sales in units are 4,300. What is the margin of safety?

Answer 1

Answer:

1,300 units

$1,950

Explanation:

The computation of margin of safety in units is given below :-

Margin of safety in units = Budgeted sales in units - Break-even sales in units

= 4,300 units - 3,000 units

= 1,300 units

The computation in dollars of safety is given below :-

Margin of safety  in dollars = Margin of safety in units × Selling per unit

= 1,300 × $1.50

= $1,950