Homework Answers
Selling price per unit = $10
Variable cost per unit = $6
Fixed cost = $110,000
Contribution margin per unit = Selling price per unit - Variable cost per unit
= 10-6
= $4 per unit
Break even point (in units) = fixed cost / Contribution margin per unit
= 110,000/4
= 27,500
Present sales = 30,000 units
Margin of safety ( units) = Present sales - Break even point (units)
= 30,000-27,500
= 2,500
Correct option is b.
Kindly comment if you need further assistance.
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