Question

Liu Company has sales of $48,500,000, and the break-even point in sales dollars is $31,040,000. Determine the company's margin of safety as a percent of current sales. Enter your answer as a whole number.

Answer 1

Answer:

Margin of safety ratio= 0.36= 36%

Explanation:

Giving the following information:

Liu Company has sales of $48,500,000, and the break-even point in sales dollars is $31,040,000.

To calculate the margin of safety as a percentage, we need to use the following formula:

Margin of safety ratio= (current sales level - break-even point)/current sales level

Margin of safety ratio=  (48,500,000 - 31,040,000) / 48,500,000

Margin of safety ratio= 0.36= 36%