Margin of Safety Kearney Company, operating at full capacity, sold 400,000 units at a price of $246.60 per unit during 2015. Its income statement for 2015 is as follows: Sales $ 98,640,000 (44,500,000) Cost of goods sold Gross profit $ 54,140,000 Expenses: Selling expenses $8,000,000 Administrative expenses 3,000,000 Total expenses (11,000,000) Income from operations $ 43,140,000 The division of costs between fixed and variable is as follows: Fixed Variable Cost of good sold 28% 72% Selling expenses 25% 75% Administrative expenses 80% 20% Management is considering a plant expansion program that will permit an increase of $8,631,000 (35,000 units at $246.60) in yearly sales. The expansion will increase fixed costs by $3,600,000 but will not affect the relationship between sales and variable costs. Round the answers to one decimal place. 1. Margin of safety for 20Y5. 71.90 % 2. Margin of safety under the proposed program assuming 2045 sales. 68.6 x % Feedback Check My Work 1 Divide the margin of safety in dollars (or units) by current sales dollars (or units) to calculate margin of safety as a percentage of sales. 2. Divide the margin of safety in dollars (or units) by current sales dollars (or units) to calculate the margin of safety as a percentage of sales