If the volume of sales is $6,000,000 and sales at the break-even point amount to $5,000,000, the margin of safety will be 20%.

Name: If the volume of sales is $6,000,000 and sales at the break-even point amount to $5,000,000, the margin of safety will be 20%.
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Quizplus · Accepted Answer

The margin of safety is calculated as (Current Sales - Break-even Sales) / Current Sales. So, it would be ($6,000,000 - $5,000,000) / $6,000,000 = 1/6 or approximately 16.67%.

If the Volume of Sales Is $6,000,000 and Sales at the Break-Even