Moe's Pizza Shop sells a large pizza for $12.00. Unit variable expenses total $8.00. The breakeven sales in units is 7000 and budgeted sales in units is 8000. What is the margin of safety in dollars?

Question

Quizplus · Accepted Answer

The margin of safety in dollars is calculated as (Budgeted Sales in Units - Breakeven Sales in Units) * Selling Price per Unit. Here, it is (8000 - 7000) * $12 = 1000 * $12 = $12,000.

Moe's Pizza Shop Sells a Large Pizza for $12