Question

If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:_________.

a) $60,000.
b) $250,000.
c) $190,000.
d) $440,000.
e) $24,000.

Answer 1

a. $60000

Step-by-step explanation:

The forecasted sales of the firm = $250000

Breakeven sales of the firm = $190000

We have to find the margin of safety by using the above given information. Therefore, it can be determined by subtracting the breakeven sales from sales.

The margin of safety = sales – breakeven sales

The margin of safety = 250000 – 190000

The margin of safety = $60000

Thus, option A is correct.