During the current year, OutlyTech Corp. expected to sell 22,500 telephone switches. Fixed costs for the year were expected to be $12,142,500, the unit sales price was budgeted at $3,250, and unit variable costs were budgeted at $1,400. OutlyTech's margin of safety ratio (MOS %) is

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andromache andromache · Answer 1 · 2020-12-15T15:48:55+01:00

Answer:

70.83%

Explanation:

The computation of the margin of safety percentage is as follows:

Margin of safety percenatge is

= Margin of safety ÷ Total sales unit

where,

margin of safety units

= Total sales units - break even sales unit

The break even sales unit

= Fixed cost ÷ contribution margin per unit

= $12,142,500 ÷ ($3,250 - $1,400)

= 6,564 units

Now the margin of safety unit is

= 22,500 units- 6,564 units

= 15,936 units

So, the margin of safety percentage is

= 15,936 units ÷ 22,500 units

= 70.83%

ewomazinoade ewomazinoade · Answer 2 · 2022-03-22T13:16:42+01:00

The margin of safety ratio is 70.82%.

The margin of safety calculates how much sales can fall before the breakeven point is reached.

The margin of safety ratio = (current sales level - breakeven sale) / current sales level

Breakeven sales = fixed cost / (price per unit variable cost)

$12,142,500 / (3250 - 1400) = 6,563.51

The margin of safety ratio = (22500 - 6,563.51) / 22,500 = 70.82%

To learn more about fixed cost, please check: https://brainly.com/question/25879561