QuestionMay 4, 2026

A company has a margin of safety of 20% . If expected sales are 50,000 then break-even sales are __ 20,000 40,000 50,000 10,000

A company has a margin of safety of 20% . If expected sales are 50,000 then break-even sales are __ 20,000 40,000 50,000 10,000
A company has a margin of safety of 20% . If expected sales are 50,000 then break-even sales are __ 20,000 40,000 50,000 10,000

Solution
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Answer

40,000 Explanation 1. Recall margin of safety formula Margin of safety (MOS) is given by: **MOS = \frac{\text{Expected Sales} - \text{Break-even Sales}}{\text{Expected Sales}}** 2. Plug in known values 0.20 = \frac{50,000 - \text{Break-even Sales}}{50,000} 3. Solve for break-even sales 0.20 \times 50,000 = 50,000 - \text{Break-even Sales} 10,000 = 50,000 - \text{Break-even Sales} \text{Break-even Sales} = 50,000 - 10,000 = 40,000

Explanation

1. Recall margin of safety formula<br /> Margin of safety (MOS) is given by:<br />**$MOS = \frac{\text{Expected Sales} - \text{Break-even Sales}}{\text{Expected Sales}}$**<br /><br />2. Plug in known values<br /> $0.20 = \frac{50,000 - \text{Break-even Sales}}{50,000}$<br /><br />3. Solve for break-even sales<br /> $0.20 \times 50,000 = 50,000 - \text{Break-even Sales}$ <br />$10,000 = 50,000 - \text{Break-even Sales}$ <br />$\text{Break-even Sales} = 50,000 - 10,000 = 40,000$
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