Ch.4Q4 (margin of safety) Projected 20X1 annual data for Bobcat Company at a bud

Question

Ch.4Q4 (margin of safety) Projected 20X1 annual data for Bobcat Company at a budgeted sales volume of 100.000 units. and which manufactures and sells a single product, are shown in the table below. Percent of sales Per unit Total Selling price Varlable expenses Contribution margin Fixed expenses Operating income $30.00 $3,000,000 1200 1.200 000 18.00 1800,000 Z20 720.000 $10.80 $1,080,000 100% 40% 60% 24% 36% Completely independent to any other soludions you may have computed,assume that the reak even point in dollars for Bobcat Company is $1,600,000 Calculate the' margin of safety' in dollars for Bobcat Company at the 100,000 unt sales volume given in the table above O A. $880,000 OB. $2000,000 OC. $1,400,000 O D. $1,600,000

Explanation / Answer

Answer C. $1,400,000

Margin of Safety = Sales - Break even point Sales = 100,000 Units X $30 - $ 1,600,000 = $1,400,000

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