If a Business Had a Capacity of $10,000,000 of Sales

question 33

Essay

If a business had a capacity of $10,000,000 of sales, actual sales of $6,000,000, break-even sales of $4,200,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

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Definitions:

Economic Policies

Strategies and actions that governments or economic organizations employ to influence the economy of a city, region, or country.

Fluctuated

To vary irregularly; to rise and fall unpredictably or to go through a series of changes in level, intensity, or value.

Sharecropping

A system of agriculture in which a landowner allows a tenant to use the land in return for a share of the crops produced on their portion of land.

Gang Labor

A system of labor, often used on plantations, where enslaved people were grouped into units or gangs for work, typically in agriculture.