Answer:
The correct answer is C.
Explanation:
Giving the following information:
Selling price per unit= $38
Unit variable expenses= $14
Total fixed expenses= $42,000
Actual sales for June= 3000 units.
First, we need to calculate the break-even point in dollar using the following formula:
Break-even point (dollars)= fixed costs/ contribution margin ratio
Break-even point (dollars)= 42,000/ [(38 - 14)/38]
Break-even point (dollars)= $66,500
Now, we can calculate the margin of safety in dollars:
Margin of safety= (current sales level - break-even point)
Margin of safety= (3,000*38 - 66,500)
Margin of safety= (114,000 - 66,500)
Margin of safety= $47,500
