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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