BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Margin of safety

Liu Inc. has sales of $48,500,000, and the break-even point in sales dollars is $31,040,000. Determine the company’s margin of safety as a percent of current sales.

To determine

Margin of Safety: It is a measure that shows the probability of decrease in the sales level before a company faces an operating loss or reaches its break-even point. It is expressed in terms of dollars of sales, unit of sales, and percent of current sales. The formula to calculate the margin of safety as a percent of current sales is as follows:

 MarginofSafety=SalesSalesatBreak-EvenPointSales

To determine: the Company L’s margin of safety as a percent of current sales.

Explanation

Determine the Company L’s margin of safety as a percent of current sales.

Sales =$48,500,000

Sales at break-even point =$31,040,000

 MarginofSafety=SalesSalesatBreak-EvenPointSales×100=

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

In what ways is economics a science?

Principles of Microeconomics (MindTap Course List)

Explain how absolute advantage and comparative advantage differ.

Essentials of Economics (MindTap Course List)

TIME VALUE OF MONEY ANALYSIS You have applied for a job with a local bank. As part of its evaluation process, y...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is a composite primary key?

Pkg Acc Infor Systems MS VISIO CD