Required information The following information applies to the questions displaye

Question

Required information The following information applies to the questions displayed below Oslo Company prepared the following contribution format income statement based o relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses Net operating income $35,000 21,000 14,000 8,400 $ 5,600 11. What is the margin of safety in dollars? What is the margin of safety percentage? Margin of safety in dollars Margin of safety percentage C Prev 9 10 11 of 22 Next > DELL F8 F9 F10 F11F12

Explanation / Answer

Break even sales in units = $8400 / $14

= 600 units

Total break even sales in dollars = 600 units * $35

= $21000

1) Margin of safety= Actual sales - break even sales

= $35000 - $21000

= $14000

Margin of safety per unit = [Actual sales - break even sales] / actual sales * 100

= [$35000 - $21000] / $35000 * 100

= $14000 / $35000 * 100

= 40%

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