question archive The following monthly data are available for Sheridan, Inc
The following monthly data are available for Sheridan, Inc
Subject:AccountingPrice:2.84 Bought7
The following monthly data are available for Sheridan, Inc. which produces only one product: Selling price per unit, $39; Unit variable expenses, $14; Total fixed expenses, $39000; Actual sales for the month of June, 3800 units. How much is the margin of safety for the company for June?
$56000
$87360
$60840
$2240
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Option b $87360
Step-by-step explanation
Margin of safety = Current sales - Break even sales
= $148200 -$60840
= $87360
Current sales = 3800 units x $39 = $148200
Break even sales in units = Fixed cost/contribution per unit
= $39000/(39-14)
= 1560 units
Break even sales = 1560 units x $39 = $60840
