how do i calculate margin of safety in sales revenue

Carry each value shown into each equation and compute the result. To complete the income statement, carry down your calculated target sales dollars and use the contribution margin ratio to calculate total contribution margin. The total variable expense will be the difference between these two values. APPLY THE CONCEPTS: Margin of Safety Margin of safety can allow you to see how much padding there is for your company between profit and loss. If this number is great, it may indicate that your company is performing very well. If this number is small, it may be worth looking into possible remediation. Consider the following pricing and cost information: Price and Cost Information Amount Selling Price per Unit $450 Variable Cost per Unit $400 Total Fixed Cost $70,000 For the upcoming period, the company projects that it will sell 2,000 units. Considering that the company has a unit break-even point of 1,400 units, what is the margin of safety in terms of both units and sales revenue? Round your answers to two decimal places, if necessary. Margin of Safety in Units = 2,000 V - 1,400 V = 600 Margin of Safety in Sales Revenue = $ X - $ = Check My Work Previous Next