The statement of financial performance for NY Blues is:
$$\begin{array} { l r }
\text { Sales } & \$ 280,000 \
\text { Variable Expenses } & \$ 190,000 \
\text { Contribution Margin } & \$ 90,000 \
\text { Fixed Expenses } & \$ 20,000 \
\text { Profit } & \$ 70,000 \
\hline
\end{array}$$
If the break-even point in sales dollars is $62,500,what is the margin of safety?

Question

The statement of financial performance for NY Blues is:
$$\begin{array} { l r } 
\text { Sales } & \$ 280,000 \
\text { Variable Expenses } & \$ 190,000 \
\text { Contribution Margin } & \$ 90,000 \
\text { Fixed Expenses } & \$ 20,000 \
\text { Profit } & \$ 70,000 \
\hline
\end{array}$$
If the break-even point in sales dollars is $62,500,what is the margin of safety?

Quizplus · Accepted Answer

The margin of safety is the difference between actual sales and the break-even point. In this case, the actual sales are $280,000 and the break-even point is $62,500. Therefore, the margin of safety is $280,000 - $62,500 = $217,500.

The Statement of Financial Performance for NY Blues Is If the Break-Even Point in Sales Dollars Is $62,500,what Is