Question

For the current year, Power Cords Corp. expected to sell 42,000 industrial power cords. Fixed costs were expected to total $1,650,000; unit sales price was expected to be $3,750; and unit variable costs were budgeted at $2,250. Power Cords Corp.'s margin of safety (MOS) in units is:
A. 40,900.
B. 48,800
C. 39,000.
D. 32,500.
E. 36,100.

Answer 1

Answer:

A. 40,900

Explanation:

Calculation for what Power Cords Corp.'s margin of safety (MOS) in units is:

First step is to calculate the Break-even

Break-even units = $1,650,000/($3,750 - $2,250)

Break-even units= 1,100 units

Now let calculate the margin of safety (MOS) in units

Margin of Safety = 42,000 - 1,100

Margin of Safety= 40,900 units

Therefore Power Cords Corp.'s margin of safety (MOS) in units is:40,900