Margin of Safety

Organic Heath Care Products Inc. expects to maintain the same inventories at the end of 20r as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were atked to submit estimates of the costs for their departments during 20r8. A summary report of these estimates is as follows: It is expected that 400,000 units will be sold at a price of $25 a unit. Maximum sales within the relevant range are 500,000 units. Determine the following based upon the estimates for 20Y8