If Hartman Co has fixed costs of 36000 and a contribution margin ration of 24 percent If expected sales are 200000 what is the margin of safety as a percent to sale?

Answer 1

First you need to find the break even sales.

Break even sales = fixed expenses/ CM ratio

Break even sales = 3600/.24 = 15,000

Then find the margin of safety dollars.

margin of safety dollars = budgeted sales - break even sales

margin of satefy dollars = 200,000 - 15,000 = 185,000

Then you can find the margin of safety percent

Margin of safety percent = margin of safety dollars/ budgeted sales dollars

margin of safey percent = 185,000/200,000 = 92.5%