Question

Please be kind enough to show all your workings and calculations step by step in a clear manner, and please double check your answer for mistakes. Thank you

A company expects to sell 20000 Units @ 50$ Per unit in year tot 2020" Variable cost is 2008 Per unit. Fixed cost is 210000$ Per annam. Calculate, 3) The Profit of the business in year 2020 Breakeven point in terms of emits 1) Mergin of sately in terms of units

Answer 1

1). Calculation of profit of the business in year 2020

Particular	per unit	amount ($)
Sales (20000) unit's	$50	1000000
(-) variable cost	$20	(400000)
Contribution	$30	600000
(-) fixed cost		(210000)
Profit		390000

2) calculation of break even point in units

Break even point in units = fixed cost/contribution per unit

= $210000/$30

  = 7000 unit's

3) calculation of margin of safety in unit's

We know that

Total sales(units)= break even point(units)+ margin of safety (units)

Therefore margin of safety in unit's= total sales in unit's - break even point in units

= 20000units - 7000units

Margin of safety in unit's= 13000units

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