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?

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