Question

Mcmurtry Corporation sells a product for $250 per unit. The product's current sales are 13,600 units and its break-even sales are 10,608 units. The margin of safety as a percentage of sales is closest to:

Answer 1

22%

Step-by-step explanation:

Margin of Safety is the amount by which sales can fall before making a loss.

Margin of Safety = Expected Sales - Break-even Sales ÷ Expected Sales

= (13,600 - 10,608) ÷ 13,600

= 0.22 or 22%