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    Dousmann Company: Compute margin of safety in dollars; margin of safety ratio

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    For Dousmann Company actual sales are $1,200,000 and break-even sales are $840,000.

    Compute the following (a) the margin of safety in dollars and (b) the margin of safety ratio.

    Margin of safety in dollars $
    Margin of safety ratio

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    Solution Preview

    Margin of safety in dollars = Actual sales - Break-even sales

    Solution Summary

    This solution helps compute the margin of safety.