Question

Gladstone Co. has expected sales of $352,000 for the upcoming month and its monthly break even sales are $332,500. What is the margin of safety as a percent of sales, rounded to the nearest whole percent

Answer 1

Answer: 5.54%

Step-by-step explanation:

The margin of safety as a percent of sales will be calculated as:

= (Expected sales - Break even sales) / Expected sales

= ($352000 - $332500) / $352000

= $19500 / $352000

= 0.0554

= 5.54%