a. If Del Rosario Company, with a break-even point at $1,160,000 of sales, has actual sales of $1,450,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2. % b. If the margin of safety for Del Rosario Company was 20%, fixed costs were $2,500,000, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Margin of Safety
a. If Del Rosario Company, with a break-even point at $1,160,000 of sales, has actual sales of $1,450,000, what is the margin of safety expressed (1) in
dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number.
1. $
2.
%
b. If the margin of safety for Del Rosario Company was 20%, fixed costs were $2,500,000, and variable costs were 80% of sales, what was the amount of
actual sales (dollars)?
(Hint: Determine the break-even in sales dollars first.)
Transcribed Image Text:Margin of Safety a. If Del Rosario Company, with a break-even point at $1,160,000 of sales, has actual sales of $1,450,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2. % b. If the margin of safety for Del Rosario Company was 20%, fixed costs were $2,500,000, and variable costs were 80% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)
Expert Solution
Step 1

a. 1. Margin of safety = Total actual sales - Break even sales

= $1450000 - $1160000

= $290000

2. Margin of safety % = Margin of safety / Total actual sales 

= $290000 / $1450000

= 20%

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