From the data given compute the Margin of Safety.
Penury Company offers two products. At present, the following represents the usual results of a month\'s operations:
|
|
Product K
|
Product L
|
|
|
|
|
Per
|
|
Per
|
Combined
|
|
|
Amount
|
Unit
|
Amount
|
Unit
|
Amount
|
|
Sales revenue.....................
|
$120,000
|
$1.20
|
$80,000
|
$0.80
|
$200,000
|
|
Variable expenses..............
|
60,000
|
0.60
|
60,000
|
0.60
|
120,000
|
|
Contribution margin..........
|
$ 60,000
|
$0.60
|
$20,000
|
$0.20
|
80,000
|
|
Fixed expenses..................
|
|
|
|
|
50,000
|
|
Net operating income........
|
|
|
|
|
$ 30,000
|
Find the margin of safety in terms of dollars.