Maruska Corporation has provided the following data concerning its only product: What is the margin of safety in dollars?
A) $4,505,760
B) $858,240
C) $3,576,000
D) $5,364,000

Question

Maruska Corporation has provided the following data concerning its only product:  What is the margin of safety in dollars?
A) $4,505,760 
B) $858,240 
C) $3,576,000 
D) $5,364,000

Quizplus · Accepted Answer

The margin of safety can be calculated as follows:

Sales - Break-even sales = Margin of safety

Sales = $18,000,000 
Break-even sales = $13,641,760

Margin of safety = $18,000,000 - $13,641,760 = $4,358,240

Therefore, the margin of safety in dollars is $4,358,240. The closest answer choice is B, $858,240.

Maruska Corporation Has Provided the Following Data Concerning Its Only