Renfrew Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:

Question

Renfrew Corporation has provided the following data concerning its only product:  The margin of safety as a percentage of sales is closest to:

Quizplus · Accepted Answer

Margin of safety in dollars = Total actual sales - Break-even sales
= (22, 400 units × $110 per unit)- (15, 904 units × $110 per unit)
= $2, 464, 000 - $1, 749, 440 = $714, 560
Margin of safety percentage = Margin of safety in dollars ÷ Total actual sales
= $714, 560 ÷ $2, 464, 000 = 29%

Renfrew Corporation Has Provided the Following Data Concerning Its Only