A company that makes organic fertilizer has supplied the following data:

-The company's margin of safety in units is closest to:

Question

A company that makes organic fertilizer has supplied the following data: 
 
-The company's margin of safety in units is closest to:

Quizplus · Accepted Answer

Selling price per unit = $4,352,000 F1F1F1S1F1F1F10 680,000 units = $6.40 per unit
Variable expense per unit = ($1,972,000 + $782,000)F1F1F1S1F1F1F10 680,000 units
= $2,754,000 F1F1F1S1F1F1F10 680,000 units = $4.05 per unit
Unit CM = Selling price per unit - Variable expenses per unit
= $6.40 per unit - $4.05 per unit = $2.35 per unit
Fixed expenses = ($730,000 + $412,000)= $1,142,000
Unit sales to break even = Fixed expenses F1F1F1S1F1F1F10 Unit CM
= $1,142,000 F1F1F1S1F1F1F10 $2.35 per unit = 485,957 units
Margin of safety = Total actual sales - Break-even sales
= 680,000 units - 485,957 units = 194,043

A Company That Makes Organic Fertilizer Has Supplied the Following