The Mildmanner Corporation has the following data for 2018: $\begin{array}{lr}
\text { Selling price per unit } & \$15 \
\text { Variable cost per unit } & \$ 9 \
\text { Fixed costs } & \$ 45,000 \
\text { Units sold } & 10,000 \text { units }
\end{array}$ The margin of safety in units will be (round to the nearest whole unit)

Question

Quizplus · Accepted Answer

The margin of safety in units is calculated as the difference between actual sales and break-even sales. First, calculate the break-even point in units: Break-even point in units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit) = $45,000 / ($15 - $9) = $45,000 / $6 = 7,500 units. Then, the margin of safety in units = Actual sales in units - Break-even sales in units = 10,000 units - 7,500 units = 2,500 units.

The Mildmanner Corporation Has the Following Data for 2018 The Margin of Safety in Units Will Be (Round to