During May XYZ Company sold 9000 units and reported the foll

 During May, XYZ Company sold 9,000 units and reported the following income statement:  Sales ............................  $540,000 Variable costs ...................   216,000 Fixed costs ......................   117,000 Net income .......................  $207,000  Calculate the margin of safety reported by XYZ Company for May.

Sales price/unit=(540,000/9000)=$60/unit

Contribution margin=SAles-Variable costs

=(540,000-216,000)=$324000

Contribution margin/unit=(324000/9000)=$36

At breakeven,units=fixed cost/Contribution margin

=(117000/36)=3250 units

Hence Margin of safety=(9000-3250)=5750 units.

=(60*5750)=$345000.

During May, XYZ Company sold 9,000 units and reported the following income statement: Sales ............................ $540,000 Variable costs ..............

During May XYZ Company sold 9000 units and reported the foll

Solution

Get Help Now

Submit a Take Down Notice