Margin of Safety

a. If Canace Company, with a break-even point at $390,500 of sales, has actual sales of $550,000, 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 Canace Company was 40%, fixed costs were $1,555,200, and variable costs were 60% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $