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Sheffield Company has sales of $509000, variable costs of $429000, and fixed costs of $23000. Ivanhoe...

Sheffield Company has sales of $509000, variable costs of $429000, and fixed costs of $23000. Ivanhoe Company has sales of $509000, variable costs of $203000, and fixed costs of $198900. Ivanhoe’s margin of safety ratio is

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Answer #1
margin of safety = Actual sales -BEP sales
Break even sales= fixed cost/contribution margin ratio
contribution = Sales - variable cost
509000-203000
306000
Contribution margin ratio= contribution /sales
306000/509000
60.118%
Break even sales= 198900/15.717%
330850
Margin of safety= 509,000-330850
178150
Margin of safety ratio= margin of safety/actual sales
178150/509000
35.00% answer
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