Final answer:
The margin of safety for Kirwan Company is $75,600 in dollars, which is 18% as a percentage of their $420,000 in actual sales.
Step-by-step explanation:
If Kirwan Company has a break-even point at $344,400 of sales and actual sales of $420,000, the margin of safety in dollars is the difference between the actual sales and the break-even sales: . Margin of Safety in dollars = Actual Sales - Break-Even Point Margin of Safety in dollars = $420,000 - $344,400 = $75,600. The margin of safety as a percentage of sale is calculated by dividing the margin of safety in dollars by the actual sales and then multiplying by 100 to get the percentage: . Margin of Safety (%) = (Margin of Safety in dollars / Actual Sales) × 100 Margin of Safety (%) = ($75,600 / $420,000) × 100 = 18%. Therefore, the margin of safety is $75,600 in dollars and 18% as a percentage of sales.