Americana Replics is owned and operated by a craftsman who makes replicas of historic firearms for museums,sportsmen,and collectors.He is currently producing 63 flintlock muskets per month.Cost data for the muskets are as follows:

If Rustic expects to sell 60 units per month,how much is his margin of safety expressed in sales revenue? (Round unit calculations up to the next whole unit. )
A)$36,600
B)$31,875
C)$21,000
D)$13,440

Question

Americana Replics is owned and operated by a craftsman who makes replicas of historic firearms for museums,sportsmen,and collectors.He is currently producing 63 flintlock muskets per month.Cost data for the muskets are as follows:

If Rustic expects to sell 60 units per month,how much is his margin of safety expressed in sales revenue? (Round unit calculations up to the next whole unit. )
A)$36,600 
B)$31,875 
C)$21,000 
D)$13,440

Quizplus · Accepted Answer

C)
 11ea8a42_4f9a_c89d_8b44_27f386af37e6_TB5024_00 Required sales in units = (Fixed costs + Target profit)/ Contribution margin per unit
Required sales in units = ($8,400 + 0)/ $270 = 32 units
Expected sales - Breakeven sales = Margin of safety in units
60 units - 32 units = 28 units
Margin of safety in units × Sales price per unit = Margin of safety in dollars
28 units × $750 per unit = $21,000

Americana Replics Is Owned and Operated by a Craftsman Who