Ask Question
29 April, 21:09

Lake sales had $2,500,000 in sales last month. the contribution margin ratio was 35% and operating profits were $175,000. what is lake's margin of safety in sales dollars?

+3
Answers (1)
  1. 29 April, 21:14
    0
    Lake sales had $2,500,000 in sales last month

    the contribution margin ratio was 35% = 35/100 = 0.35

    operating profits were $175,000

    Fixed costs = $2,500,000 * 0.35 - 175,000

    =$875,000 - $175,000

    = $700,000

    $700,000/.35 = $2,000,000

    Margin of safety = $2,500,000 - $2,000,000 = $500,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Lake sales had $2,500,000 in sales last month. the contribution margin ratio was 35% and operating profits were $175,000. what is lake's ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers