Creative Cravat neckties sell for $75 each. Unit variable expenses total $50. The break-even sales in units is 4,000 and budgeted sales in units is 9,600. What is the margin of safety in dollars?

Question

Quizplus · Accepted Answer

The margin of safety in units is the difference between budgeted sales and break-even sales, which is 9,600 - 4,000 = 5,600 units. The margin of safety in dollars is 5,600 units * $75 per unit = $420,000.

Creative Cravat Neckties Sell for $75 Each