Callicott Corporation produces a product that sells for $120 per unit. The product's current sales are 25,400 units and its break-even sales are 18,542 units. The margin of safety as a percentage of sales is closest to:
A)27%
B)37%
C)63%
D)73%

Question

Quizplus · Accepted Answer

The margin of safety is calculated as (Current Sales - Break-even Sales) / Current Sales. Here, it is (25,400 - 18,542) / 25,400 = 0.269, which is approximately 27%.

Callicott Corporation Produces a Product That Sells for $120 Per