A companys contribution format income statement for last month is given below:

Sales (46,000 units $26 per unit)	$	1,196,000
Variable expenses		837,200
Contribution margin		358,800
Fixed expenses		287,040
Net operating income	$	71,760

The company considers renovating its operations by purchasing a new machine that would reduce variable expenses by $7.80 per unit. However, fixed expenses would increase to a total of $645,840 each month. Using the new machine would not cause a change in monthly sales quantity or price per unit. What would the company's margin of safety in dollars be if it purchases and uses the new machine?

Brewer 8e Rechecks 2018-07-28

rev: 08_16_2018_QC_CS-133748

Multiple Choice

• $239,200

• $956,800

• $1,076,400

• $119,600