Columbus Industries makes a product that sells for $25 a unit.The product has a $5 per unit variable cost and total fixed costs of $9,000.At budgeted sales of 2,000 units,the margin of safety ratio is:
A) 22.5%.
B) 10%.
C) 77.5%.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

Margin of safety = (Budgeted sales - Break-even sales) / Budgeted sales= (2,000 units - 1,200 units) / 2,000 units= 800 units / 2,000 units= 0.4 or 40%Margin of safety ratio = Margin of safety / Budgeted sales= 40% / 100%= 0.4 or 40%= 77.5%

Columbus Industries Makes a Product That Sells for $25 a Unit.The