Spandex, Inc., has fixed costs of $36,000 and a contribution ratio of 20%. If sales are $200,000, what is the margin of safety percentage?
A) 2%
B) 10%
C) 20%
D) 26%

Name: Spandex, Inc., has fixed costs of $36,000 and a contribution ratio of 20%. If sales are $200,000, what is the margin of safety percentage? A) 2% B) 10% C) 20% D) 26%
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Breakeven Sales = $36,000 ÷ 20 % = $180,000
Margin of Safety % = (Sales - B/E Sales) ÷ Sales = ($200,000 - 180,000) ÷ 200,000 = 10%