Asked by Angie Rivera on Apr 25, 2024
Verified
If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:
A) $60,000.
B) $250,000.
C) $190,000.
D) $440,000.
E) $24,000.
Forecasted Sales
An estimate of the amount of revenue that a company expects to generate from the sale of goods or services in a future period.
- Investigate and clarify the relevance of the margin of safety and the method involved in calculating it.
Verified Answer
LM
lehlogonolo macdonald maroga7 days ago
Final Answer :
A
Explanation :
Margin of safety in dollars can be calculated as the difference between forecasted sales and break-even sales.
Margin of safety = Forecasted sales - Break-even sales
Margin of safety = $250,000 - $190,000
Margin of safety = $60,000
Therefore, the margin of safety in dollars is $60,000.
Margin of safety = Forecasted sales - Break-even sales
Margin of safety = $250,000 - $190,000
Margin of safety = $60,000
Therefore, the margin of safety in dollars is $60,000.
Learning Objectives
- Investigate and clarify the relevance of the margin of safety and the method involved in calculating it.