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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Sales mix and margin of safety
Use the data from E11-20. assume that 31.500 units of digital game players and 13.500 computer tablets were sold in the current year. Assuming no change in the sales mix. determine the following for Northwest Technology Inc. Round to one decimal place.
Margin of safety for tablets expressed as (a) units sold, (b) sales dollars, and (c) a percentage.

To determine

Concept Introduction:

Margin of Safety: The projected or budgeted sale more than the break even sale is denoted by the margin of sales in amount and to calculate margin of sale in percentage we divide the amount by the sales.

To Calculate:

Find Margin of safety in units, dollars and in percentage. Find the amount of actual sales.

Explanation

Margin of safety in Units Sold= Units sold − break even sales unit

= 13500- (936000*30%)/(120-80)

= 13500- 7020

= 6480 units

Margin of safety in s...

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