Question

# For Sheridan Company, actual sales are \$1,660,000, and break-even sales are \$1,228,400. (a) Compute the margin...

For Sheridan Company, actual sales are \$1,660,000, and break-even sales are \$1,228,400.

(a)

Compute the margin of safety in dollars.

 Margin of safety \$

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(b)

Compute the margin of safety ratio.

 Margin of safety ratio %

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A. Margin of safety in dollars = Actual sales - breakeven sales.

Margin of safety in dollars = 1,660,000 - 1,228,400

Margin of safety in dollars = \$ 431,600.

B. Margin of safety in % = (Actual sales - breakeven sales) /actual sales x 100

Margin of safety in % = (1,660,000 - 1,228,400)/1,660,000 x 100

Margin of safety in % = 431,600/1,660,000 x 100

Margin of safety in % = 26%.

SUMMARY:

1. Margin of safety in dollars = \$ 431,600.

2. Margin of safety in % = 26%

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