Question

Staley Co. manufactures computer monitors. The following is a summary of its basic cost and revenue data: Per Unit Percent Sales price $480 100 Variable costs 312 65 Unit contribution margin $168 35 Assume that Staley Co. is currently selling 600 computer monitors per month and monthly fixed costs are $80,000. Staley Co.'s margin of safety ratio (MOS%) if 600 units are sold would be (round intermediate calculation up to nearest whole number of units): 79.5%. 19.5%. 33.4%. 17.7%. 20.5%.

Answer 1

Answer:

20.5%

Explanation:

Calculation for what Staley Co.'s margin of safety ratio (MOS%) if 600 units are sold would be

First step is to calculate Break-even amount

Break-even = $80,000/($480-$312)

Break-even= 476.19

Break-even= 477 approximately

Second step is to calculate the Margin of Safety

Margin of Safety = 600-477

Margin of Safety= 123

Now let calculate the margin of safety ratio

Margin of safety ratio=123/600

Margin of safety ratio=20.5%

Therefore Staley Co.'s margin of safety ratio (MOS%) if 600 units are sold would be 20.5%