Homework Answers
Answer
- The validity of these data are questionable because:
>margin of Safety units = Total sales units – Break even sales unit.
= 420000 – 472500 = -52,500 - Correct margin of safety as per above calculation is coming NEGATIVE 52500 units.
- The question states margin of safety in units be 29400 units, which is not at all correct.
- Moreover, margin of safety is calculated when actual total sales exceed the break even sale.
- Hence, among all 3 figure amount, 1 or more than one is questionable.
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