Mississippi Mile Travel Company is conducting a sensitivity analysis in order to assess the company's margin of safety in units and in dollars. Predicted data indicate that 4900 travel package sales can be expected while 2000 package sales are necessary to meet the company's breakeven point. Each travel package costs $2700. Calculate the company's margin of safety in package units and dollars.

Question

Quizplus · Accepted Answer

The margin of safety in units is calculated as the difference between the expected sales and the breakeven sales, which is 4900 - 2000 = 2900 units. The margin of safety in dollars is calculated by multiplying the margin of safety in units by the cost per unit, which is 2900 units * $2700 = $7,830,000.

Mississippi Mile Travel Company Is Conducting a Sensitivity Analysis in Order