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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
      X = 300000 units

    (2) Breakeven sales in dollars:

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

    (2) Margin of safety ratio: $500000 ÷ $2000000 = 25%

    Margin of Safety Ratio = (expected sales - breakeven sales) / Actual sales.
    au.pfinance.yahoo.com/admin/financial-techniques.html

    Embleton Company

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

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    Breakeven sales in units:

    5X = 2X + 900000
    (Sales Price *X= Variable cost *X+ Fixed Cost)
    $3X = $900000
      X = ...

    Solution Summary

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

    $2.19