If a company has a selling price of $80, variable costs of $50, and fixed costs of $10,000, what is the margin of safety in dollars if they expect to sell 300 units?

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Q: If a company has a selling price of $80, variable costs of $50, and fixed costs of $10,000, what is the margin of safety in dollars if they expect to sell 300 units?

Solution: Expected sales = 300 units * $80 = $24,000. Break-even sales = Fixed costs + (Variable costs * Units) = $10,000 + ($50 * 200) = $20,000. Margin of safety = Expected sales - Break-even sales = $24,000 - $20,000 = $4,000.

Steps: 4

Step 1: Calculate the expected sales by multiplying the number of units expected to sell (300) by the selling price per unit ($80).
Step 2: Calculate the total variable costs by multiplying the variable cost per unit ($50) by the number of units at break-even point (200).
Step 3: Calculate the break-even sales by adding the fixed costs ($10,000) to the total variable costs from Step 2.
Step 4: Calculate the margin of safety by subtracting the break-even sales from the expected sales calculated in Step 1.

If a company has a selling price of $80, variable costs of $50, and fixed costs of $10,000, what is the margin of safety in dollars if they expect to sell 300 units?

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