Company M Had Fixed Costs of $262,500, Variable Costs of $625,000

Essay

Company M had fixed costs of $262,500, variable costs of $625,000, and actual sales amounted to $1,000,000. If the company has a break-even point at $700,000 in sales revenue, determine (a) the margin of safety expressed in dollars, (b) the margin of safety expressed as a percentage of sales, (c) the contribution margin ratio, and (d) the operating income.