Engineering Board Exam Reviewer · Engineering Management · medium
A company's break-even point is 5000 units and it currently sells 8000 units. What is its margin of safety as a percentage of sales?
- 60.0%
- 37.5%
- 62.5%
- 3000.0%
Answer
B. 37.5%
Solution
Margin of safety = (actual − break-even)/actual = 3000/8000 = 37.5%.
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