Sheridan Bucket Co., a manufacturer of rain barrels, provided the following data for 2021:- **Sales quantity**: 2,200 barrels- **Unit selling price**: $75 per barrel- **Unit variable costs**: $45 per barrel- **Fixed costs**: $18,480 ---**Understanding Margin of Safety in Sales**The margin of safety is a financial metric that indicates how much sales can drop before a business reaches its break-even point. It is an essential measure for assessing the risk of a business's operations.- **Margin of Safety (in sales dollars):** - This refers to the amount by which actual or anticipated sales exceed the break-even sales. - Input your calculated value in the dollar field provided.- **Margin of Safety Ratio (in percentage):** - This ratio expresses the margin of safety as a percentage of actual or budgeted sales. - It is calculated using the formula: \[ \text{Margin of Safety Ratio} = \left( \frac{\text{Margin of Safety}}{\text{Total Sales}} \right) \times 100 \] - Enter the percentage in the designated field.To calculate these values, ensure that you have your current or forecasted sales and break-even sales figures.---

Break-even sales is the point of unit sales where the net income is $0. Any sale above break-even…

Sheridan Bucket Co., a manufacturer of rain barrels, had the following data for 2021: Sales quantity Unit selling price Unit variable costs Fixed costs 2,200 barrels. $75 $45 $18,480 per barrel per barrel

Sheridan Bucket Co., a manufacturer of rain barrels, had the following data for 2021: Sales quantity Unit selling price Unit variable costs Fixed costs 2,200 barrels. $75 $45 $18,480 per barrel per barrel

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Sheridan Bucket Co., a manufacturer of rain barrels, provided the following data for 2021:

- **Sales quantity**: 2,200 barrels
- **Unit selling price**: $75 per barrel
- **Unit variable costs**: $45 per barrel
- **Fixed costs**: $18,480

---

**Understanding Margin of Safety in Sales**

The margin of safety is a financial metric that indicates how much sales can drop before a business reaches its break-even point. It is an essential measure for assessing the risk of a business's operations.

- **Margin of Safety (in sales dollars):**
- This refers to the amount by which actual or anticipated sales exceed the break-even sales.
- Input your calculated value in the dollar field provided.

- **Margin of Safety Ratio (in percentage):**
- This ratio expresses the margin of safety as a percentage of actual or budgeted sales.
- It is calculated using the formula:
\[
\text{Margin of Safety Ratio} = \left( \frac{\text{Margin of Safety}}{\text{Total Sales}} \right) \times 100
\]
- Enter the percentage in the designated field.

To calculate these values, ensure that you have your current or forecasted sales and break-even sales figures.

---

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