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hkk hkk
wrote...
5 years ago
Americana Replics is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. He is currently producing 63 flintlock muskets per month. Cost data for the muskets are as follows:

Price per unit$750
Variable costs per unit480
Fixed costs per month8,400

If Rustic expects to sell 60 units per month, how much is his margin of safety expressed in sales revenue? (Round unit calculations up to the next whole unit.)
A) $36,600
B) $31,875
C) $21,000
D) $13,440
Textbook 
Horngren's Accounting

Horngren's Accounting


Edition: 11th
Authors:
Read 66 times
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Replies
wrote...
#1
5 years ago
 C
Explanation:  C)
Sales price per unit$750
Less variable cost per unit(480)
Contribution margin per unit$270

Required sales in units = (Fixed costs + Target profit) / Contribution margin per unit
Required sales in units = ($8,400 + 0) / $270 = 32 units

Expected sales - Breakeven sales = Margin of safety in units
60 units - 32 units = 28 units

Margin of safety in units  Sales price per unit = Margin of safety in dollars
28 units  $750 per unit = $21,000
hkk Author
wrote...
#2
5 years ago
Genius!!!!!!
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