Mcmurtry Corporation sells a product for $300 per unit. The product's current sales are 14,100 units and its break-even sales are 10,293 units. The margin of safety as a percentage of sales is closest to:

Question

Quizplus · Accepted Answer

The margin of safety is calculated as (Current Sales - Break-even Sales) / Current Sales. Here, it is (14,100 units - 10,293 units) / 14,100 units = 3,807 units / 14,100 units = 0.27, or 27%.

Mcmurtry Corporation Sells a Product for $300 Per Unit