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What is the margin of safety in dollars and percent of sales for Boston Company?

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Boston Company is considering the production and sale of a new product with the following sales and cost data:

Unit sales prices is $300;
unit variable costs is $180;
total fixed costs is $270,000; and
projected sales is $900,000.

Show calculations to find what is the margin of safety: In dollar sales? As a percent of sales?

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Solution Summary

The solution explains how to determine the margin of safety in dollars and percent of sales with step by step calculations.

Solution Preview

Margin of safety = Current sales - Breakeven sales
Current sales = $900,000
Breakeven sales = ...

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