Divine Foods produces a gourmet condiment that sells for $24 per unit.Variable cost is $6 per unit,and fixed costs are $8,000 per month.If Divine expects to sell 1,500 units,compute the margin of safety in units.(Round any intermediate calculations and your final answer to the nearest whole unit. )

Question

Quizplus · Accepted Answer

B)
 11ea86d6_82f2_92f7_92b6_c1cee6800169_TB2804_00 Breakeven sales in units = (Fixed costs + Target profit)/ Contribution margin per unit
Breakeven sales in units = ($8,000 + 0)/ $18 = 444 units
Expected sales - Breakeven sales = Margin of safety in units
1,500 units - 444 units = 1,056 units

Divine Foods Produces a Gourmet Condiment That Sells for $24