margin of safety Economy class seats at break-even seats 10. EX.19-23 ALGO (Algo
ID: 2577371 • Letter: M
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margin of safety
Economy class seats at break-even seats 10. EX.19-23 ALGO (Algorithmic) Margin of Safety a. If Canace Company, with a break-even point at $364,800 of sales, has actual sales of $570,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ th marin of saterfor Canace Company was 20.o fixed costs were $955 800, and variable costs were 80% of sales, what was the amount of actual sales dollars ? (Hint: Determine the break-even in sales dollars first.) 11. PR.19-01A Classify Costs mour Clothing Co. manufactures a variety of clothing types for distribution to several major retail chains. The following costs are incurred in the pro Required 0 Type here to searchExplanation / Answer
a.1.
Margin of safety in $ = Total budgeted or actual sales – Breakeven sales
= $ 570,000 - $ 364,800 = $ 205,200
2.
Margin of safety in % = Margin of safety in $/Total actual sales
= $ 205,200/$ 570,000 = 0.36 x 100 = 36 %
b.
Suppose Sales = $ X
C. M. = Sales – variable cost = X – 0.8 X
Breakeven sales = Fixed cost/ C. M.
= $ 956,800/ X – 0.8 X
= $ 956,800 /0.2 X
Margin of safety in $ = X – ($ 956,800 /0.2 X)
Margin of safety in % = Margin of safety in $/Sale
0.2 = X – ($ 956,800 /0.2 X)/X
0.2 X = X – ($ 956,800 /0.2 X)
0.2 X = (0.2 X2 - $ 956,800)/0.2 X
0.2 X x 0.2 X = 0.2 X2 - $ 956,800
0.04 X2 = 0.2 X2 - $ 956,800
0.2 X2 – 0.04 X2 = $ 956,800
0.16 X2 = $ 956,800
X2 = $ 956,800/0.16 = $ 5,980,000
X = ($ 5,980,000)1/2
= 2,445.403852 or 2,446 units
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