I am halfway getting this almost lol. I need to present a table of information and see how this answer was reached. selling price= $200 Variable Costs= $150 Fixed Costs= $1,000,000.00 Unit Sales= 25,000 units how do you find the margin of safety in dollars, and percentage?
I am halfway getting this almost lol. I need to present a table of information and see how this answer was reached.
selling price= $200
Variable Costs= $150
Fixed Costs= $1,000,000.00
Unit Sales= 25,000 units
how do you find the margin of safety in dollars, and percentage?
Margin of safety means the difference between the budget sales and breakeven sales. It means the amount of sales that can be reduced so that to reach at break even point.
It can be calculated as
Margin of safety in units = Budget sale in units – break even sales in units
Break even point means a point where firm is neither earning profit nor incurring any loss.
For calculating break even , we need to have fixed cost and Contribution per unit.
Break even in units = Fixed Cost / Contribution per unit
Contribution = Sales – Variable Cost
Margin of safety in percentage = (Total sales – Break even sales)*100/total sales
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