The manager at Tom's Taxidermy expects to sell 900 units at $80 each unit. In order for the manager to breakeven, the manager must sell 100 units. What is the margin of safety in dollars?
Answer:
$64,000
Explanation:
Given that, the margin of safety is a term that describes the disparity between the actual sales volume and the breakeven volume.
In this case, Tom's Taxidermy expects to sell 9,00 units at $80 each and their breakeven volume is 100 units, the margin of sales, in dollars, is:
MS = ( 900 - 100) * $80
MS = 800 * $80
= $64,000
Therefore, the right answer as Margin of Safety in dollars = $64,000
