Use the information below to answer the following question(s).Dr.Mickey Finn performs a certain procedure for $400.00.The fixed costs are $8,000 and variable costs are $200.00 per procedure.
-What is the margin of safety in units assuming the procedure is performed 200 times?

Question

Quizplus · Accepted Answer

The margin of safety in units is calculated by subtracting the break-even point in units from the actual sales in units. The break-even point is calculated as fixed costs divided by the contribution margin per unit (selling price per unit minus variable cost per unit). Here, the contribution margin per unit is $400 - $200 = $200. The break-even point is $8,000 / $200 = 40 units. Therefore, the margin of safety is 200 units (actual sales) - 40 units (break-even point) = 160 units.

Use the Information Below to Answer the Following Question(s)