Cornerstone Exercise 4-21 Margin of Safety

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and vari- able selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 1,650.

Required:

1. Calculate the margin of safety in terms of the number of units

2. Calculate the margin of safety in terms of sales revenue.