Answer:
$53,240
Explanation:
We know that,
Break even point = Fixed cost ÷ contribution margin ratio
$290,400 = Fixed cost ÷ 55%
So, the fixed cost = $290,400 × 55% = $159,720
As the variable expense is 45% and we assume the sales is 100%, so the contribution ratio would be 100% - 45% = 55%
Now the margin of safety equal to
= (Expected sales - break even sales) ÷ (expected sales) × 100
25% = (Expected sales - $290,400) ÷ (expected sales) × 100
25% Sales = (Expected sales - $290,400)
So, the expected sales would be
= $290,400 ÷ 75%
= $387,200
Now the actual profit equals to
= Sales - variable expenses - fixed cost
= $387,200 - $174,240 - $159,720
= $53,240
The variable expense is computed below:
= $387,200 × 45%
= $174,240
