Question

Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expenses total $45. Fixed costs are...

Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expenses total $45. Fixed costs are $60,000.

Current sales are 3,500 units.

What is the margin of safety in dollars?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Ans. Margin of safety in dollars is equal to the difference between current sales in dollars and break even sales in dollars.

Working notes:

*Calculation for contribution margin ratio:

Contribution margin ratio = (Selling price per unit - Variable cost per unit) / Selling price per unit

= ($75 - $45) / $75

= $30 / $75

= 40%

*Calculation of break even sales in dollars:

Break even sales in dollars = Fixed cost / Contribution margin ratio

= $60,000 / 40%

= $150,000

*Calculation of current sales in dollars:

Current sales in dollars = Current sales in units * Selling price per unit

= 3,500 * $75

= $262,500

*Calculation for margin of safety in dollars:

Margin of safety in dollars = Current sales in dollars - Break even sales in dollars

= $262,500 - $150,000

= $112,500

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company sells 25,000 units for $60 each. Variable expenses per unit are $35. Fixed expenses...
A company sells 25,000 units for $60 each. Variable expenses per unit are $35. Fixed expenses for the company are $220,000. Provide the following information. Enter your answers in the same order in which these appear. Contribution margin per unit Contribution margin ratio Break-even in unit sales Break-even in dollar sales Margin of safety in dollars Margin of safety percentage Degree of operating leverage
Fixed Costs are $50,000 and our product sells for $200 per unit. To produce each product...
Fixed Costs are $50,000 and our product sells for $200 per unit. To produce each product it takes $120 in variable costs. Current sales are 800 units. What is the Margin of Safety?
Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45...
Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45 per unit Fixed expenses $240,000 CVP Relationships Compute the CM ratio Selling price per unit Variable expenses per unit = Contribution margin per unit = CM ratio = Compute the break-even Break-even in unit sales= Break-even in dollar sales= Compute the margin of safety Margin of safety in dollars= Margin of safety percentage=
Splurge Electronics sells homework machines for ₹80 each. Variable costs per unit are ₹45 and total...
Splurge Electronics sells homework machines for ₹80 each. Variable costs per unit are ₹45 and total fixed costs are ₹43,750. Splurge Electronics expects it can sell 1,500 units next year. By how many units can Splurge’s sales drop before the company incurs a loss?
Halifax Products sells a product for $108. Variable costs per unit are $55, and monthly fixed...
Halifax Products sells a product for $108. Variable costs per unit are $55, and monthly fixed costs are $111,300. a. What is the break-even point in units? b. How many units would need to be sold to earn a target profit of $206,700? c. Assuming they achieve the level of sales required in part b, what is the margin of safety in sales dollars?
If fixed costs are $300,000, the unit selling price is $75, and the unit variable costs...
If fixed costs are $300,000, the unit selling price is $75, and the unit variable costs are $45.  What is the break-even sales in sales dollars? A. $300,000 B. $450,000 C. $1,125,000 D. $750,000 show me the correct steps to get this answer, please.
Harmony Company sells a product for $50 per unit. Variable costs per unit are $30, and...
Harmony Company sells a product for $50 per unit. Variable costs per unit are $30, and monthly fixed costs are $ 150,000. C. Assume they achieve the level of sales required in part what is the margin of safety in sales dollars? Break Even Point in Units: 7500 Level of sales from part b: $12500
Jasmine Inc. sells a product for $60 per unit. Variable costs per unit are $32, and...
Jasmine Inc. sells a product for $60 per unit. Variable costs per unit are $32, and monthly fixed costs are $210,000. a. What is the break-even point in units? b. What unit sales would be required to earn a target profit of $159,600? c. Assume they achieve the level of sales required in part b, what is the margin of safety in sales dollars?
6.Flannigan Company manufactures and sells a single product that sells for $640 per unit; variable costs...
6.Flannigan Company manufactures and sells a single product that sells for $640 per unit; variable costs are $352. Annual fixed costs are $985,500. Current sales volume is $4,390,000. Compute the current margin of safety in dollars for Flannigan Company. 1,647,975. $2,190,000. $2,200,000. $3,520,530. $3,076,950.
Zhao Co. has fixed costs of $469,200. Its single product sells for $193 per unit, and...
Zhao Co. has fixed costs of $469,200. Its single product sells for $193 per unit, and variable costs are $125 per unit. If the company expects sales of 10,000 units, compute its margin of safety in dollars and as a percent of expected sales.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT