Answer
Margin of safety in dollars = Actual sales – Break even sales = 20,000 – 15,000 = 5,000 (dollars)
Margin of safety percentage = Margin of safety in dollars $\div$ Actual sales = 5,000 $\div$ 20,000 x 100 = 25 %
(the margin of safety ratio would be 0.25)
Work Step by Step
Actual sales = 20,000 dollars (in the table)
Break even sales = 15,000 dollars (as calculated in question 9)
Margin of safety in dollars = Actual sales – Break even sales = 20,000 – 15,000 = 5,000 (dollars)
Margin of safety percentage = Margin of safety in dollars $\div$ Actual sales = 5,000 $\div$ 20,000 x 100 = 25 %
