The following is last month's contribution format income statement: What is the company's margin of safety in dollars?

Question

The following is last month's contribution format income statement:  What is the company's margin of safety in dollars?

Quizplus · Accepted Answer

11eaaee8_6782_2791_933a_75c2042d0701_TB5186_00 Break-even in total sales dollars = Fixed expenses F1F1F1S1F1F1F10 Contribution margin ratio
= $500,000 F1F1F1S1F1F1F10 0.40 = $1,250,000
Margin of safety in dollars = Sales - Break-even sales
= $1,500,000 - $1,250,000 = $250,000

The Following Is Last Month's Contribution Format Income Statement