What is the margin of safety in dollars? (Do not round intermediate calculations.)
Question
What is the margin of safety in dollars?
(Do not round intermediate calculations.)
Solution
To calculate the margin of safety in dollars, you need to follow these steps:
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Calculate the break-even point: This is the point where total revenue equals total costs. It can be calculated by dividing total fixed costs by the contribution margin ratio. The contribution margin ratio is calculated by subtracting variable cost per unit from selling price per unit, and then dividing by selling price per unit.
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Calculate the actual or expected sales: This is the amount of sales that the company actually made or expects to make.
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Subtract the break-even point from actual or expected sales: The result is the margin of safety in dollars. This represents the amount by which sales could decrease before the company would start to incur losses.
Please note that without specific numbers, I can't provide a numerical answer. But this is the general process you would follow to calculate the margin of safety in dollars.
Similar Questions
Marshall Company had actual sales of $600,000 when break-even sales were $420,000. What is the margin of safety ratio?a.25%.b.30%.c.33.33%d.45%Clear my choice
Actual sales Rs .4,00,000; Break-even sales Rs. 2,50,000; Margin of Safety in percentage is _.a.33.33%.b.76.33%.c.37.5% .d.66.67%
P/V Ratio is 25% and Margin of Safety is Rs; 3,00,000, the amount of profit is .a.Rs. 80,000.b.Rs. 1,00,000.c.. Rs. 60,000.d.Rs. 75,000.
Break - even point occurs at 40% of` total capacity, margin of safety will be .a.40% .b.60% .c.85% .d.80% .
Net sales revenue minus variable costs equals the:Group of answer choicesmargin of safetyrelevant rangecontribution marginbreakeven point
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