The margin of safety in the Flaherty Company is $24,000.If the company's sales are $120,000 and its variable expenses are $80,000,its fixed expenses must be:

Question

Quizplus · Accepted Answer

Margin of safety = Sales - Break-even point
$24,000 = $120,000 - Break-even point

Break-even point = $96,000 (total fixed and variable costs)

Total variable costs = $80,000
Break-even point = Total fixed costs + Total variable costs
$96,000 = Total fixed costs + $80,000

Total fixed costs = $16,000 
Therefore, the answer is D) $32,000.

The Margin of Safety in the Flaherty Company Is $24,000