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5 March, 03:41

Majid Corporation sells a product for $150 per unit. The product's current sales are 41,400 units and its break-even sales are 32,880 units. What is the margin of safety in dollars

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  1. 5 March, 04:07
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    The margin of safety in dollars amounts to $12,78,000

    Explanation:

    The margin of safety in dollars is computed as:

    Margin of safety in dollars = Total Sales - Break - even Sales

    where

    Total Sales is computed as:

    Total Sales = Units * Price

    = 41,400 units * $150 per unit

    Total Sales = $6,210,000

    Break-even sales is computed as:

    Break-even sales = Units * Price

    = 32,880 units * $150 per units

    Break-even sales = $4,932,000

    So, putting the values above:

    Margin of safety in dollars = $6,210,000 - $4,932,000

    Margin of safety in dollars = $12,78,000
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