Molander corporation is a distributor of a sun umbrella used at resort hotels. data concerning the next month's budget appear below:

selling price $27 per unit
variable expenses $16 per unit
fixed expenses $8,910 per month
unit sales 960 units per month

requirement 1:
compute the company's margin of safety. (omit the "$" sign in your response.)

margin of safety $

Margin of safety in dollars is 4050

Explanation:

The margin of safety  can be expressed in dollar amounts or number of units, we are looking the Margin of safety in dollars

The formula is:  

Margin of safety in dollars = Current sales – Breakeven sales

Current Sales= Selling price *Unit sales

Current Sales= $27 *960 units= 25920

The break-even point formula is calculated by dividing the total fixed costs of production by the price per unit less the variable costs to produce the product.

break-even point =Fixed expenses /Price-variable expenses

break-even point =$8,910 /$27 - $16

break-even point = 810

The break-even formula in sales dollars is calculated by multiplying the price of each unit by the answer from our first equation.

Break even=Selling price*break-even point in units

Break even in dollars= $27 *810

Break even in dollars= 21870

Margin of safety in dollars = Current sales – Breakeven sales

Margin of safety in dollars = $25920 – $21870= 4050

answer///supply is elastic, and demand is inelastic;