- This topic has 3 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
76)Hello sir.
Please help to be ensured: Is the BE sales= Budget sales – margin of safety?
Cause i didnt see this formula in the lectures. You gave us only Margin of safety=Budget sales – BE sales/Budget sales
As i get it, the first is in “unit” terms the other is in “% of Budget sales” terms?
and Are there any other formulae, except the ones I know:
BREAKEVEN SALES= FIXED COSTS/CS RATIO
BREAKEVEN VOLUME=FIXED COSTS/CONTRIBUTION PER UNIT
MARGIN OF SAFETY(%)=BUDGET SALES-BE SALES/BUDGET SALES
CONTRIBUTION=C/S RATIO*SALES
VARIABLE COST=(1-C/S) *SALES
AVERAGE C/S RATIO=TOTAL CONTRIBUTION OF ALL PRODUCTS / TOTAL SALES OF ALL PRODUCTSI do say in the lectures that the margin of safety can be calculated in units (budget sales – breakeven sales), but I also explain why. it is more sensible (and more common) to express it as a % of budget sales.
- The topic ‘Margin of safety’ is closed to new replies.