Answer:
Margin of safety = 4600 units
Explanation:
given data
Selling price per unit = $44
Unit variable expenses = $14
Total fixed expenses = $42000
Actual sales June = 6000 units
solution
we get here break-even point in units that is express as
Break-even point = fixed costs ÷ contribution margin ..............1
put here value and we get
Break-even point = [tex]\frac{42000}{44-14}[/tex]
Break-even point = 1400 units
so now we can get here Margin of safety that is express as
Margin of safety = current unit sales - break-even point ........2
put here value and we get
Margin of safety = 6000 units - 1400 units
Margin of safety = 4600 units
