Vintage Weaponry is owned and operated by a craftsman who makes replicas of historic firearms for museums,sportsmen,and collectors.He is currently producing 40 flintlock muskets per month.Data are as follows: $$\begin{array} { | l | r | }
\hline \text { Sales price per unit } & \$ 800 \
\hline \text { Variable cost per unit } & 470 \
\hline \text { Fixed costs per month } & 10,230 \
\hline
\end{array}$$ If Vintage expects to sell 60 units per month,how much is his margin of safety expressed in sales revenue?

Question

Vintage Weaponry is owned and operated by a craftsman who makes replicas of historic firearms for museums,sportsmen,and collectors.He is currently producing 40 flintlock muskets per month.Data are as follows: $$\begin{array} { | l | r | } 
\hline \text { Sales price per unit } & \$ 800 \
\hline \text { Variable cost per unit } & 470 \
\hline \text { Fixed costs per month } & 10,230 \
\hline
\end{array}$$ If Vintage expects to sell 60 units per month,how much is his margin of safety expressed in sales revenue?

Quizplus · Accepted Answer

To calculate the margin of safety, we need to find out how much the current sales volume is below the expected sales volume.

Current sales volume = 40 units per month 
Expected sales volume = 60 units per month

Margin of safety in units = Expected sales volume - Current sales volume 
= 60 - 40 
= 20 units

Margin of safety in sales revenue = Margin of safety in units x Unit selling price

Unit selling price is unknown, so we cannot calculate the exact margin of safety. However, we can eliminate options A, B, and D as they all exceed the total revenue generated from selling 20 units of the musket. The only option that remains is C, which is $23,200. Therefore, the answer is C.

Vintage Weaponry Is Owned and Operated by a Craftsman Who