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Discussion: Margin of Safety

a. If Fama Company, with a break-even point at $471,200 of sales, has actual sales of $620,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales?

b. If the margin of safety for Watkins Company was 40%, fixed costs were $1,464,000, and variable costs were 60% of sales, what was the amount of actual sales (dollars)?

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Category:- Accounting Basics
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