Ensley Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:
A) 61%
B) 28%
C) 72%
D) 39%

Question

Ensley Corporation has provided the following data concerning its only product:  The margin of safety as a percentage of sales is closest to:
A) 61% 
B) 28% 
C) 72% 
D) 39%

Quizplus · Accepted Answer

Margin of safety = Total Sales - Break-even Sales
= $780,000 - $560,000
= $220,000

Margin of Safety as a percentage of sales = (Margin of Safety / Total Sales) x 100
= ($220,000 / $780,000) x 100
= 28%

Therefore, the closest option is B, 28%.

Ensley Corporation Has Provided the Following Data Concerning Its Only