Antique Works is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. The data are as follows:

Sales price per unit $800

Variable cost per unit 470

Fixed costs per month 8,580

If Antique expects to sell 40 units per month, what is his margin of safety expressed in units per month?

Select one:

A. 14 units

B. 40 units

C. 12 units

D. 66 units

Question

Business

Guest

15 June, 15:41

Antique Works is owned and operated by a craftsman who makes replicas of historic firearms for museums, sportsmen, and collectors. The data are as follows:

Sales price per unit $800

Variable cost per unit 470

Fixed costs per month 8,580

If Antique expects to sell 40 units per month, what is his margin of safety expressed in units per month?

Select one:

A. 14 units

B. 40 units

C. 12 units

D. 66 units

+5

Answers (1)

Know the Answer?

Ignacio Odom · Answer 1

A. 14 units

Explanation:

Contribution Per unit = Sales price - variable cost per unit

= $800 - $470

= $330

Break Even sales in units = Fixed Cost / Contribution per unit

= $8,580/$330

= 26 units

Margin of Safety = Total sales units - Break even sales in units

= 40 units - 26 units

= 14 units

Therefore, if Antique expects to sell 40 units per month, his margin of safety expressed in units per month is 14 units.