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During the current year mute corporation expected that sell 24,600 telephone switches. fixed cost of the year were expected to be 12,147,000 the unit sales price was budgeted at 3,500 and unit variable costs are budgeted at 1,680. minutes margin of safety in units is

Respuesta :

The corporation's margin of safety is 0.73.

What is the margin of safety?

Margin of safety is the amount of sales a company makes in excess of the breakeven point.

Margin of safety = (forecasted sales -  break-even sales) / forecasted sales

Break even sales = fixed cost / (price per unit - variable cost)

12,147,000 / (3500 - 1680) = 6,674.18

Margin of safety = (24,600 - 6,674.18) / 24,600 = 0.73

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