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MariettaO [177]
3 years ago
14

The following monthly data are available for Waterway Industries. which produces only one product: Selling price per unit, $54;

Unit variable expenses, $14; Total fixed expenses, $42000; Actual sales for the month of June, 2000 units. How much is the margin of safety for the company for June
Business
1 answer:
o-na [289]3 years ago
8 0

Answer:

Margin of safety= 950 units

Explanation:

<u>First, we need to calculate the break-even point in units:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 42,000 / (54 - 14)

Break-even point in units= 1,050

<u>Now, the margin of safety in units:</u>

<u></u>

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

Margin of safety= 2,000 - 1,050

Margin of safety= 950 units

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