Puchalla Corporation sells a product for $230 per unit.The product's current sales are 13,400 units and its break-even sales are 10,720 units.The margin of safety as a percentage of sales is closest to:

Question

Quizplus · Accepted Answer

Margin of safety in dollars = Total sales - Break-even sales
= $230 per unit F1F1F1S1F1F1F10 13,400 units - $230 per unit F1F1F1S1F1F1F10 10,720 units
= $3,082,000 - $2,465,600 = $616,400
Margin of safety percentage = Margin of safety in dollars F1F1F1S1F1F1F10 Total sales
= $616,400 F1F1F1S1F1F1F10 $3,082,000 = 0.20

Puchalla Corporation Sells a Product for $230 Per Unit