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Shambo Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) $ 60,000 Variable expenses 42,000 Contribution margin 18,000 Fixed expenses 13,200 Net operating income $ 4,800 The margin of safety percentage is closest to:

Respuesta :

Answer:

26.66 or 27%

Explanation:

The computation of the margin of safety percentage is shown below:

Margin of Safety

= 100 - Break Even %

= 100 - 73.33

= 26.66 or 27%

Working Note

Sales (3,000 units) $60,000

Less: Variable expenses -$42,000

Contribution margin -$18,000

CM Ratio (A) 30.00%

Fixed expenses (B) 13,200

Break Even Point C = B ÷ A 44,000

Break Even % of Total Sale 73.33%

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