Given a margin of safety amounting to $25,000 and budgeted sales revenue of $45,000, what is the margin of safety expressed as a percentage?

Multiple choice question for Financial Ratios Analysis. Select an option, then review the explanation below.

Explanation

The margin of safety percentage is calculated by dividing the margin of safety by the budgeted revenue and then multiplying by 100. Thus, (25,000 ÷ 45,000) × 100 = 55.56%.

Practice related questions from the same subject.

1.What term is used to describe the economic results forecasted for various potential event combinations?
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5.Given that the contribution margin amounts to $3,000 and total sales revenue is $9,000, what is the total value of variable costs?

Given a margin of safety amounting to $25,000 and budgeted sales revenue of $45,000, what is the margin of safety expressed as a percentage?

Explanation

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