Question

What is the margin of safety (in sales) when a business has sales of $485,000, sales of $225,000 at break-even point, and unit selling price of $55

Answer 1

Margin of safety= $260,000

Step-by-step explanation:

Giving the following information:

Sales= $485,000

Break-even point in dollars= $225,000

To calculate the break-even point in sales dollars, we need to use the following formula:

Margin of safety= (current sales level - break-even point)

Margin of safety= 485,000 - 225,000

Margin of safety= $260,000