Been at this for an hour! Please explain and answer. a. If Steele Company, with

Question

Been at this for an hour! Please explain and answer. a. If Steele Company, with a break-even point at $378,000 of sales, has actual sales of $540,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2. % b. If the margin of safety for Kramer Company was 20%, fixed costs were $900,000, and variable costs were 70% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.) $

Explanation / Answer

a) MOS = Sales - BES = 540000 - 378000 = 162000 MOS % = 162000/540000*100 = 30% b) Calculate BES = 900000/(1-.70) = 3000000 20% = X-3000000/3000000 * 100 X-3000000 = 600000 X = 3600000

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