Question 19.7: Rachel Company has sales of $400,000, and the break-even poi...
Rachel Company has sales of $400,000, and the break-even point in sales dollars is $300,000. Determine the company’s margin of safety as a percent of current sales.
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Margin of Safety = \frac{Sales – Sales at Break-Even Point}{Sales} = \frac{\$400,000 – \$300,000}{\$400,000} = \frac{\$100,000}{\$400,000}= 25%
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