Ensley Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:
A)61%
B)28%
C)72%
D)39%

Question

Ensley Corporation has provided the following data concerning its only product:  The margin of safety as a percentage of sales is closest to:
A)61% 
B)28% 
C)72% 
D)39%

Quizplus · Accepted Answer

Margin of safety in dollars = Total actual sales - Break-even sales
= (30,300 units × $200 per unit)- (21,816 units × $200 per unit)
= $6,060,000 - $4,363,200 = $1,696,800
Margin of safety percentage = Margin of safety in dollars ÷ Total actual sales
= $1,696,800 ÷ $6,060,000 = 28%

Ensley Corporation Has Provided the Following Data Concerning Its Only