Answer by 11pm eastern standard time USA

Exercise 3-11A Margin of safety LO 3-4

Benedetta Company makes a product that sells for $57 per unit. The company pays $25 per unit for the variable costs of the product and incurs annual fixed costs of $240,000. Benedetta expects to sell 12,000 units of product.

Required:

Determine Benedettas margin of safety expressed as a percentage.(Round your answer to1decimal place.(i.e., .234 should be entered as 23.4))

First compute the margin of safety in sales revenue dollars. Margin of safety in sales revenue dollars is budgeted revenue less break-even revenue. Then convert that to a % by dividing by budgeted sales in dollars.