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Margin of Safety Problems

Strong Wood Company is a distributor of patio furniture. Data concerning the next month's budget appear below.
Selling price $290.00
Variable expense $174.00
Fixed expense $158,000.00
Unit sales 1,500 units per month

a. What is the company's margin of safety? (Please show all work so I am able to learn the formulas)
b. What is the company's margin of safety as a percentage of sales? (Please show all work so I am able to learn the formulas)

I am very interested in learning how to do this, so any help with formulas is great, and please show all computations in your work.

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Solution a):

1500 x 290 = 435000
1500 x 174 = 261000
1500 x 158 = 237000
261000 + 237000 = 498000
498000 ...

Solution Summary

This solution calculates the margin of safety and margin of safety as a percentage of sales for Strong Wood Company. All calculations are shown and explained.

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