Peach Company sells a single product for $63 with variable costs of $21 per unit. Peach’s total monthly fixed costs are $63,000. During April actual sales were 3,100 units. How much is the margin of safety for April? A :

The margin of safety for April, expressed as a difference and as percent:

Explanation:

The margin of safety is the how much the sales exceed the breakeven volume of sales.

1. Calculate the breakeven volume:

Equation:

                   ↓                          ↓                          ↓

                 21x             +      63,000        =        63x

Solve for x:

2. Margin of safety:

You can report the margin of safety as the difference, 1,600 units, or as a percent of the sales:

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