Majid Corporation sells a product for $150 per unit. The product's current sales are 41,400 units and its break-even sales are 32,880 units. What is the margin of safety in dollars

The margin of safety in dollars amounts to $12,78,000

Explanation:

The margin of safety in dollars is computed as:

Margin of safety in dollars = Total Sales - Break - even Sales

where

Total Sales is computed as:

Total Sales = Units * Price

= 41,400 units * $150 per unit

Total Sales = $6,210,000

Break-even sales is computed as:

Break-even sales = Units * Price

= 32,880 units * $150 per units

Break-even sales = $4,932,000

So, putting the values above:

Margin of safety in dollars = $6,210,000 - $4,932,000

Margin of safety in dollars = $12,78,000