Smith Company produces desk lamps. The information for June indicated that the selling price was $\$25$ per unit, variable costs were $\$15$ per unit, fixed costs totaled $\$6,000$, and the margin of safety in dollars was $\$12,500$. Smith currently sells 1,100 lamps and earns $\$5,000$ of profit. How much is Smith’s margin of safety ratio?
- To compute Margin of Safety Ratio you take (Margin of Safety in Dollars/Actual (expected) Sales)