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Grissom Company estimates that variable costs will be 60% of sales, and fixed costs will total $800,000. The selling price of the product is $4.00.
Grissom Company estimates that variable costs will be 60% of sales, and fixed costs will total $800,000. The selling price of the product is $4.00. c) Compute the margin of safety in (1) dollars and (2) as a ration, assuming actual sales are $2.5 million. Note: My calulations are as follows: Actual(expected) sales-break-even sales=Margin of safety in Dollars 2,500,000-2,000,000=500,000 Margin of Safety in Dollars/Actual(Expected) Sales=Margin of Safety Ratio 500,000/2,500,000=20% Please advise...Thank you
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