Answer:
$16,000
Step-by-step explanation:
Calculation to determine what The margin of safety in dollars is closest to
First step is to calculate the Contribution margin ratio using this formula
Contribution margin ratio=Contribution margin/Sales
Let plug in the formula
Contribution margin ratio=(128,000/320,000)
Contribution margin ratio=0.4
Second step is calculate the breakeven sales using this formula
Breakeven sales=(Fixed cost/Contribution margin ratio)
Let plug in the formula
Breakeven sales=121600/0.4
Breakeven sales=$304,000
Now let determine the Margin of safety using this formula
Margin of safety=Total sales-Breakeven sales
Let plug in the formula
Margin of safety=320,000-304,000
Margin of safety=$16,000
Therefore The margin of safety in dollars is closest to: $16,000