Determine the margin of safety in dollars if unit sales = 5,000 units; Dollar Sales =...
Determine the margin of safety in dollars if unit sales = 5,000 units; Dollar Sales = $500,000; Fixed Costs = $204,000; and Variable Costs = $187.5001
Homework Answers
Margin of Safety in dollars = $173,600
Workings
Margin of Safety in dollars = Budgeted Sales - Break Even Sales
= 500,000 - 326,400 = $173,600
Break Even Sales = Fixed Costs/Contribution Margin = 204000/62.5% = $326,400
Contribution Margin = (Sales - Variable Costs)/Sales =(500000-187500)/500000 = 312500/500000 = 62.5%
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