Wynn Technology USB drives sell for $15 per drive.Unit variable expenses total $9.The breakeven sales in units is 2,000 and budgeted sales in units is 4,200.What is the margin of safety in dollars?

Question

Quizplus · Accepted Answer

First, let's calculate the contribution margin per unit:

Selling price per unit - Unit variable expense = $15 - $9 = $6

Now, we can calculate the breakeven sales in dollars:

Breakeven sales in units * Selling price per unit = 2,000 * $15 = $30,000

Next, we can calculate the budgeted sales in dollars:

Budgeted sales in units * Selling price per unit = 4,200 * $15 = $63,000

To calculate the margin of safety in dollars, we need to subtract the breakeven sales from the budgeted sales:

Margin of safety = Budgeted sales - Breakeven sales 
Margin of safety = $63,000 - $30,000 
Margin of safety = $33,000

Therefore, the best choice is C, as this is the margin of safety in dollars.

Wynn Technology USB Drives Sell for $15 Per Drive