During the current year, OutlyTech Corp. expected to sell 24,000 telephone switches. Fixed costs for the year were expected to be $12,144,000, the unit sales price was budgeted at $3,200, and unit variable costs were budgeted at $1,440.
OutlyTech's margin of safety (MOS) in units is (rounded up to nearest whole number):

Question

Quizplus · Accepted Answer

The margin of safety in units is calculated as the difference between expected sales and breakeven sales. Breakeven sales in units = Fixed Costs / (Sales Price per Unit - Variable Cost per Unit) = $12,144,000 / ($3,200 - $1,440) = 6,900 units. Margin of Safety = 24,000 - 6,900 = 17,100 units.

During the Current Year, OutlyTech Corp