Determine margin of safety in terms of dollars

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Reference no: EM1311181

From the data given compute the Margin of Safety.

Penury Company offers two products. At present, the following represents the usual results of a month\'s operations:

 

Product K

Product L

 

 

 

Per

 

Per

Combined

 

Amount

Unit

Amount

Unit

Amount

Sales revenue.....................

$120,000

$1.20

$80,000

$0.80

$200,000

Variable expenses..............

   60,000

  0.60

  60,000

  0.60

  120,000

Contribution margin..........

$  60,000

$0.60

$20,000

$0.20

80,000

Fixed expenses..................

 

 

 

 

    50,000

Net operating income........

 

 

 

 

$  30,000

Find the margin of safety in terms of dollars.

 

Reference no: EM1311181

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