Margin of safety OBJ. 5 a. If Canace Company, with a break-even point at $960,000 of sales,

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Margin of safety OBJ. 5

a. If Canace Company, with a break-even point at $960,000 of sales, has actual sales of $1,200,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?

b. If the margin of safety for Canace Company was 20%, fixed costs were $1,875,000, and variable costs were 80% of sales, what was the amount of actual sales (dollars)?

(Hint: Determine the break-even in sales dollars first.)

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Financial And Managerial Accounting

ISBN: 9781305267831,9781305267848

13th Edition

Authors: Carl S. Warren , James M. Reeve , Jonathan Duchac

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