Question

Mark is given the following data: Sales Quantity: 11,600 Fixed Costs: 8,401,000 Unit Sales Price: 4,300...

Mark is given the following data:

Sales Quantity: 11,600

Fixed Costs: 8,401,000

Unit Sales Price: 4,300

Unit Variable Cost: 2,050

What is the Margin of Safety (MOS) in units?

Business   Accounting   
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Answer #1
MARGIN OF SAFETY = ACTUAL SALES - BREAK EVEN SALES
PARTICULARS PER UNIT
SALES 4300
LESS: VARIABLE COST -2050
CONTIBUTION 2250
(SALES -VARIBALE COST)
BREAK EVEN SALES(UNITS)= FIXED COST /(SALES -VC PER UNIT)
BREAK EVEN SALES(UNITS)= 8401000/2250
BREAK EVEN SALES(UNITS)= 3733.777778
MARGIN OF SAFETY = ACTUAL SALES - BREAK EVEN SALES
MARGIN OF SAFETY = 11600-3733.78
MARGIN OF SAFETY = 7866.22
MARGIN OF SAFETY = 7866 UNITS
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