The following information is provided: Sales price per unit £95 Variable cost per unit £50 Fixed...
The following information is provided: Sales price per unit £95 Variable cost per unit £50 Fixed costs £80,000 Expected sales 5,000 units Calculate the margin of safety, expressed as a percentage of forecast sales.
Homework Answers
Break even sales = Fixed costs / (Sales price per unit - Variable cost per unit)
= 80000 / (95-50)
= 1778 units
Margin of safety = Sales - Break even sales = 5000 - 1778 = 3222
Margin of safety % = Margin of safety/Sales
= 3222/5000
= 64.44%
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