Warner Manufacturing reported sales of $2,000,000 last year (100,000 units at $20 each), when the break-even point was 75,000 units.Warner's margin of safety ratio is

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The margin of safety ratio is calculated as (Actual Sales - Break-even Sales) / Actual Sales. Here, actual sales are 100,000 units, and the break-even point is 75,000 units. So, the margin of safety is (100,000 - 75,000) / 100,000 = 25%.

Warner Manufacturing Reported Sales of $2,000,000 Last Year (100,000 Units