If the unit selling price is $50, the volume of sales is $450,000, sales at the break-even point amount to $375,000, and the maximum possible sales are $550,000, the margin of safety will be 2,000 units.

Question

Quizplus · Accepted Answer

The margin of safety is calculated as the difference between actual sales and sales at the break-even point, divided by the unit selling price. In this case, it would be ($450,000 - $375,000) / $50 = 1,500 units, not 2,000 units.

If the Unit Selling Price Is $50, the Volume of Sales