OutlyTech Corp.expected to sell 24,000 telephone switches.Fixed costs were $12,144,000,unit sales price was $3,200,and unit variable costs were $1,440.OutlyTech'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. Break-even sales in units = Fixed Costs / (Sales Price per Unit - Variable Cost per Unit) = $12,144,000 / ($3,200 - $1,440) = 7,500 units. Margin of safety in units = 24,000 - 7,500 = 16,500 units. Margin of safety ratio = 16,500 / 24,000 = 0.6875 or 68.75%. However, the closest option is 71.25%.