Margin of Safety

a. If Armstrong Company, with abreak-even pointat $660,000 of sales, has actual sales of $880,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.

1. $

2. %

b. If the margin of safety for Lankau Company was 25%,fixed costswere $2,325,000, andvariable costswere 60% of sales, what was the amount of actual sales (dollars)? (Hint:Determine the break-even in sales dollars first.) $

Break-Even Sales andSales Mixfor a Service Company

Latitude & Attitude Airline provides air transportation services between New York City and George Town, Grand Cayman. A single New York City to George Town, Grand Cayman round-trip flight has the following operating statistics:

It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight.

a. Compute the break-even number of seats sold on a single round-trip flight for the overall product, E. Assume that the overall product mix is 20% business class and 80% economy class tickets.

Total number of seats at break-even

seats

b. How many business class and economy class seats would be sold at thebreak-even point?

Business class seats at break-even	seats
Economy class seats at break-even	seats