margin of safety

fenil 12 April 2020 at 17:09 PM

Bruce Inc. has the following information about Rut, the only product it sells. The selling price for each unit is $20, the total variable cost per unit is $8, and total fixed cost for the firm is $60,000. Bruce has budgeted sales of $130,000 for the next period. What is the margin of safety in dollars for Bruce? a) $30,000 b) $70,000 c) $100,000 d) $130,000

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FACULTY 15 May 2020 at 03:56 PM

selling price = $20

variable cost= 8

contribution per unit =12

contribution margin =60% (12/20)*100

break even sales = fixed cost/60%

=60000/.6 =100000

margin of safety = total sales -breakeven sales

=130000-100000

=30000

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