If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.

Name: If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is 45.8%.
Brand: Quizplus
Rating: 4.9 (45 reviews)

Question

Quizplus · Accepted Answer

The margin of safety is calculated as (Current Sales - Break-even Sales) / Current Sales. So, it would be ($7,000,000 - $4,800,000) / $7,000,000 = $2,200,000 / $7,000,000 = 0.3143 or 31.43%, not 45.8%.

If the Volume of Sales Is $7,000,000 and Sales at the Break-Even