APPLY THE CONCEPTS: Margin of Safety

Margin of safety can allow you to see how much padding there is for your company between profit and loss. If this number is great, it may indicate that your company is performing very well. If this number is small, it may be worth looking into possible remediation. Consider the following pricing and cost information:

Price and Cost Information Amount

Selling Price per Unit $500

Variable Cost per Unit $350

Total Fixed Cost $50,000

For the upcoming period, the company projects that it will sell 5,000 units. Considering that the company has a unit break-even point of 333.33 units, what is the margin of safety in terms of both units and sales revenue? Round your answers to two decimal places, if necessary.

Margin of Safety in Units = 5,000 - 333.33= 4,666.67

Margin of Sales in Revenue = $______ - $_______ =$____________