Respuesta :
Answer:
1. $7,502
2. 25%
Explanation:
For computing the margin of safety, first we have to find out the break even sales which is shown below:
Break-even point = (Fixed expenses) ÷ (Profit volume Ratio)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $30 - $20
= $10
And, Profit volume ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100
So, the Profit volume ratio = (10) ÷ (30) × 100 = 33.33%
And, the fixed expenses is $7,500
Now put these values to the above formula
So, the value would equal to
= (7,500) ÷ (33.33%)
= $22,502
1. Now the margin of safety equals to
= Expected sales - break-even sales
where,
Expected sales = Selling price per unit × Unit sales per month
= $30 × 1,000 units
= $30,000
And, the break-even sales is $15,000
Now put these values to the above formula
So, the value would equal to
= $22,502 - $15,000
= $7,502
2. And, the margin of safety to sales percentage equals to
= (Margin of safety ÷ expected sales) × 100
= ($7,502 ÷ 30,000) × 100
= 25%
Answer:
margin of safety with respect to its sales is 31.81%
Explanation:
Compute the company's margin of safety.
Selling Price = &30
Variable cost = &20
Contribution per unit = $30 - $20 =$10
Fixed cost = $7500
Break even sales = (Fixed cost ÷ Contribution per unit) x Selling price per unit
= (7500÷ 11) x 30
= 20454.54
Expected Sales = 1000 x 30 = 30000
Margin of safety = Expected Sales – Break even sales
= 30000 – 20454.54
= 9545.45
so, Margin of safety is $9545.45
Now determine company's margin of safety with respect to its sales
Margin of safety proportion is given as = (Margin of Safety ÷ Expected sales) x 100
= (9545.45 ÷ 30000) x 100
= 31.81 %
