=+EX 21-22 Break-even sales and sales mix for a service company obj. 5

✔

a. 50 seats

a. If Fama Company, with a break-even point at $360,000 of sales, has actual sales of

$480,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?

b. If the margin of safety for Watkins Company was 25%, fixed costs were $1,200,000, and variable costs were 75% of sales, what was the amount of actual sales (dollars)?

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