Mcmurtry Corporation sells a product for $290 per unit

Accounting Oct 10, 2020

Mcmurtry Corporation sells a product for $290 per unit. The product's current sales are 14,000 units and its break-even sales are 10,360 units. The margin of safety as a percentage of sales is closest to:

74%

65%

26%

35%

Expert Solution

Computation of the margin of safety as a percentage of sales:-

Margin of safety units = Actual sales units - Break even sales units

= 14,000 - 10,360

= 3,640 units

Margin of safety % = Margin of safety / Actual sales units

= 3,640 / 14,000

= 26%

Correct option is 3). 26%

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