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Use the following information to determine the margin of safety in dollars: Unit sales 70,000 Units...

Use the following information to determine the margin of safety in dollars: Unit sales 70,000 Units Dollar sales $ 700,000 Fixed costs $ 174,052 Variable costs $ 329,000

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Answer #1

Ans : Margin of safety = ( Current Sales - Breakeven Sales )

= ( $ 700,000 - $ 328,400)

= $ 371,600.

Note 1: Total contribution = Totals Sales value - Total variable cost

= $ 700,000 - $ 329,000

= $ 371,000.

Note 2: Contribution margin = Tota contribution / Total sales value.

= $ 371,000 / $ 700,000 (From Note 1)

= 53 %

Note 3: Breakeven Sales = Fixed cost / Contribution margin

= $ 174,052 / 53 %

= $ 328,400

Breakeven point = Fixed cost / Contribution margin

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