Question

If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is: Multiple Choice $60,000. $250,000. $190,000. $440,000. $24,000.

Answer 1

Answer:

Margin of safety= $60,000

Explanation:

Giving the following information:

A firm's forecasted sales are $250,000 and its break-even sales are $190,000.

The margin of safety is the excess of sales from the break-even point. To calculate the margin of safety, we need to use the following formula:

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

Margin of safety= 250,000 - 190,000= 60,000