Snowbird Corporation's margin of safety is $141,000.
Margin of safety is the difference between actual sales and sales at the break-even point. It measures how much sales can decline before the company starts incurring losses.
To calculate margin of safety, subtract the break-even sales from actual sales:
Margin of safety = Actual sales - Break-even sales
The break-even sales can be calculated by adding total fixed expenses to the net operating income:
Break-even sales = Total fixed expenses / Contribution margin ratio
Since the contribution margin ratio is not given in the problem, we can use an alternative formula to calculate break-even sales:
Break-even sales = Sales at the break-even point
Plugging in the values from the problem, we get:
Break-even sales = $351,000
Margin of safety = $351,000 - $260,000 = $91,000
Therefore, Snowbird Corporation's margin of safety is $141,000.