The dollar amount of the margin of safety is 413270.
A company's margin of safety is the amount of revenue it generates that is greater than its break-even point. Break-even sales are subtracted from actual sales to determine the margin of safety.
Break-even sales = 25,721 x $130 = 3343730 Margin of safety = 3757000 - 3343730 = 413270 The dollar amount of the margin of safety is 413270. Total Sales = 28,900 x $130 = 3757000.
The difference between the expected profitability and the break-even point is the margin of safety. Divide current sales by the breakeven point to arrive at the margin of safety formula.
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