The Whitehead Company has sales of $690,000, and the break-even point in sales dollars is $531,300.
Determine the
company's margin of safety as a percent of current sales.
%
Solution :
The formula for calculating the Margin of safety as a percent of current sales is
Margin of safety = ( Current sales – Break even point in sales ) / Current sales
As per the information given in the question we have
Current sales = $ 690,000 ; Break even point in sales = $ 531,300
Applying the above information in the formula we have
= ( $ 690,000 - $ 531,300 ) / $ 690,000
= $ 158,700 / $ 690,000
= 0.2300
= 23.00 %
Thus the company's margin of safety as a percent of current sales = 23.00 %
The Whitehead Company has sales of $690,000, and the break-even point in sales dollars is $531,300....
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