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6 October, 00:40

Gould Enterprises sells computer disks for $1.50 per disk. Unit variable expenses total $0.90. The breakeven sales in units are 3,000 and budgeted sales in units are 4,300. What is the margin of safety?

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  1. 6 October, 00:58
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    1,300 units

    $1,950

    Explanation:

    The computation of margin of safety in units is given below : -

    Margin of safety in units = Budgeted sales in units - Break-even sales in units

    = 4,300 units - 3,000 units

    = 1,300 units

    The computation in dollars of safety is given below : -

    Margin of safety in dollars = Margin of safety in units * Selling per unit

    = 1,300 * $1.50

    = $1,950
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