Lineman Corporation sells a product for $230 per unit. The product's current sales are 23,400 units and its break-even sales are 20,124 units.
What is the margin of safety in dollars?

Question

Quizplus · Accepted Answer

The margin of safety can be calculated as:

Margin of Safety = Actual Sales - Break-even Sales

Margin of Safety = 23,400 - 20,124 = 3,276 units

Therefore, the margin of safety in dollars is:

Margin of Safety in Dollars = Margin of Safety x Selling Price per Unit

Margin of Safety in Dollars = 3,276 x $230 = $753,480

So, the best choice for the margin of safety in dollars is option C.

Lineman Corporation Sells a Product for $230 Per Unit