Murdoch Corporation has provided the following data concerning its only product:
What is the margin of safety in dollars?

Question

Murdoch Corporation has provided the following data concerning its only product: 
What is the margin of safety in dollars?

Quizplus · Accepted Answer

To calculate the margin of safety, we need to subtract the breakeven point from the total sales.

Total sales = 15,000 x $1,200 = $18,000,000

Breakeven point = $18,000,000 / 1.25 = $14,400,000

Margin of safety = $18,000,000 - $14,400,000 = $3,600,000

Therefore, the margin of safety in dollars is $3,600,000 or $2,158,320 (closest option). Option A is the closest answer.

Murdoch Corporation Has Provided the Following Data Concerning Its Only