Question

Awanita Enterprises sells computer flash drives for $ 3.87 per unit. Unit variable cost is $ 0.05. The breakeven point in units is 3 comma 400​, and expected sales in units are 4 comma 500. What is the margin of safety in​ dollars?

Answer 1

Answer:

Margin of safety= $4,257

Explanation:

Giving the following information:

The breakeven point in units is 3,400​, and the expected sales in units are 4,500.

First, we need to determine the dollar amount of sales:

Break-even point= 3,400*3.87= $13,158

Current sales= 4,500*3.87= $17,415

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

Margin of safety= 17,415 - 13,158= $4,257