Oakbrook Inc. reported actual sales of $2000000 and fixed costs of $350000. The contribution margin ratio is 25%.
Instructions
Compute the margin of safety in dollars and the margin of safety ratio.

Margin Of Safety

The difference between actual or projected sales and the break-even point, measuring operational risk and efficiency.

Fixed Costs

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Contribution Margin Ratio

The percentage of each sales dollar that contributes to covering fixed costs and generating profit.