The manager at Tom's Taxidermy expects to sell 800 units at $30 each unit

Accounting Feb 24, 2021

The manager at Tom's Taxidermy expects to sell 800 units at $30 each unit. In order for the manager to breakeven, the manager must sell 400 units. What is the margin of safety in dollars?

A) $12,000

B) $14,000

C) $16,000

D) $24,000

Expert Solution

Answer: A

Explanation: A)

800 units × $30 = $24,000

400 units × $30 = 12,000

Margin of safety in dollars: $24,000 - $12,000 = $12,000 margin of safety

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