Please provide the solution with working James Company has a margin of safety pe

Question

Please provide the solution with working

James Company has a margin of safety percentage of 20% based on its actual sales. The break-even point is $190,000 and the variable expenses are 40% of sales. Given this information, the actual profit is: (Do not round intermediate calculations.)

Please provide the solution with working

James Company has a margin of safety percentage of 20% based on its actual sales. The break-even point is $190,000 and the variable expenses are 40% of sales. Given this information, the actual profit is: (Do not round intermediate calculations.)

Explanation / Answer

contribution margins is 100 - 40 = 60%

profit is on margin of safety which is 190,000 * 0.2 = 38,000

Hence profit is 0.6 * 38,000 = 22,800

Hence

C) 22,800

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