Question

The manager at Tom's Taxidermy expects to sell 900 units at $40 each unit. In order for the manager to breakeven, the manager must sell 800 units. What is the margin of safety in dollars

Answer 1

Answer:

11.11%

Explanation:

Budgeted sales = 900 units x $40 per unit = $36,000

Break-even sales = 800units x $40 per unit = $32,000

Margin of safety = $\frac{Budgeted sales - Breakevensales(revenue)}{budgeted sales}$ × 100

Margin of safety = ( 36,000 - 32,000) / 36,000 = 11.11%