Part a)
1. Margin of safety in dollars = actual sales- break even sales
= $ 560000 - $ 448000
= $112000
2. Margin of safety in percentage =
Margin of safety in dollars/actual sales × 100
= $112000/560000 ×100
= 20 %
Part 2)
Firstly we have to calculate break even sales
= fixed cost/(1-variable cost percentage)
= 1707300/(1-70%)
= $ 5691000
Actual sales = break even sales /(1-margin of safety percentage)
= 5691000 /(1-30%)
=$ 8130000
Thus the correct answer is $ 8130000
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