Sales price $6.74 per unit Variable costs $2.33 per unit
Fixed Costs $9376
Budgeted number of units 5317
What is margin of safety in units?(Round to the nearest whole unit in your final answer)

Margin of safety = 3190.922902 units rounded off to 3191 units

Explanation:

Margin of safety is the cushion or extra number of units that the business sells over the break even point in units. The break even point is the point where total revenue equals total cost and the business earns no profit or no loss. To calculate the margin of safety in units, we deduct the break even number of units from the budgeted number of units or sales.

Margin of safety = Budgeted units  -  Break even number of units

First we need to calculate the break even in units. The formula for break even in units is,

Break even in units = Fixed cost / (Selling price per unit - Variable cost per unit)

Break even in units = 9376 / (6.74 - 2.33)

Break even in units = 2126.077098 rounded off to 2126 units

Margin of safety = 5317  -  2126.077098

Margin of safety = 3190.922902 units rounded off to 3191 units

two years ago, when picking flowers in the mountains back of yosemite valley, i found a book. it was blotted and storm-beaten; all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however; many of the inner pages were well preserved. and although all were more or less stained and torn, whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today; its granite pages have been torn and blurred by the same storms that wasted the castaway book.

two years ago, when picking flowers in the mountains back of yosemite valley; i found a book. it was blotted and storm-beaten, all of its outer pages were mealy and crumbly. the paper seemed to dissolve like the snow beneath which it had been buried, however, many of the inner pages were well preserved. and although all were more or less stained and torn; whole chapters were easily readable. this is the condition of the great open book of yosemite glaciers today, its granite pages have been torn and blurred by the same storms that wasted the castaway book.

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