Smart Robot Company is a company that makes very small robots. The company's October 2020 budget...
Smart Robot Company is a company that makes very small robots. The company's October 2020 budget is shown below: Price per unit: $300 Variable expenses per unit: $200 Fixed expenses for October: $75,000 Unit sales in October: 10,000 (1) Calculate the Margin of Safety (2) What is the margin of safety as a percentage of sales? Please show all work for the problem.
Homework Answers
Contribution margin=Sales-Variable cost
=(300-200)=$100 per unit
Breakeven=Fixed expenses/Contribution margin
=(75000/100)=750 units
Margin of Safety=Total sales-Breakeven sales
=10,000-750
=9250 units
=(9250*300)=$2775000
Margin of Safety %=Margin of Safety/Total sales
=9250/10,000
=92.5%
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