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# Margin of Safety Ratio

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Breakeven sales in units:

5X = 2X + 900000
(Sales Price *X= Variable cost *X+ Fixed Cost)
\$3X = \$900000
&#8194;&#8194;X = 300000 units

(2) Breakeven sales in dollars:

300000 units X \$5 per unit = \$1500000
(c) (1) Margin of safety in dollars:&#8194;\$2000000 - \$1500000 = \$500000 (Actual Sales-Breakeven sales)

(2) Margin of safety ratio:&#8194;\$500000 ÷ \$2000000 = 25%

Margin of Safety Ratio = (expected sales - breakeven sales) / Actual sales.

Embleton Company

(See attached file for full problem description)

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https://brainmass.com/economics/break-even-analysis/margin-safety-ratio-86561

#### Solution Preview

Breakeven sales in units:

5X = 2X + 900000
(Sales Price *X= Variable cost *X+ Fixed Cost)
\$3X = \$900000
&#8194;&#8194;X = ...

#### Solution Summary

This provides the steps to calculate the Margin of Safety Ratio.

\$2.19