For the current year, Power Cords Corp. expected to sell 42,000 industrial power cords. Fixed costs were expected to total $1,650,000; unit sales price was expected to be $3,750; and unit variable costs were budgeted at $2,250.
Power Cords Corp.'s margin of safety (MOS) in units is:

Question

Quizplus · Accepted Answer

The margin of safety is the difference between the expected sales and the breakeven sales. The breakeven sales can be calculated using the following formula:Breakeven sales = Fixed costs / (Unit sales price - Unit variable costs)Plugging in the given values, we get:Breakeven sales = $1,650,000 / ($3,750 - $2,250) = 40,900 unitsTherefore, the margin of safety is:Margin of safety = Expected sales - Breakeven sales= 42,000 units - 40,900 units= 1,100 units

For the Current Year, Power Cords Corp