Ask Question
29 January, 16:20

A company with an operating income of $92,000 and a contribution margin ratio of 74% has a margin of safety of: (rounded)

Choose Correct Answer Below:

$68,080.

$124,324.

$353,846.

It is not possible to determine the margin of safety from the information provided.

+5
Answers (1)
  1. 29 January, 18:35
    0
    The correct answer is $124,324.

    Explanation:

    The basic formula to calculate margin of safety is

    Budgeted sales - Break even sales.

    Here in this question the information we need to calculate the margin of safety from above formula is not provided. We will then use Contribution margin ratio to calculate margin of safety as,

    Contribution Margin = (Sales - Variable Cost) / Sales

    74 % = Operating Income / Sales

    Sales = $92,000 / 74%

    = $124,324.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A company with an operating income of $92,000 and a contribution margin ratio of 74% has a margin of safety of: (rounded) Choose Correct ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers