The Following Is Last Month's Contribution Format Income Statement What Is the Company's Margin of Safety Percentage,rounded to the \text

question 126

Multiple Choice

The following is last month's contribution format income statement:
$\begin{array}{|l|r|}\hline \text { Sales }(12,000 \text { units) } & \$ 1,200,000 \\\hline \text { Less: variable expenses } & \underline{700,000} \\\hline \text { Contribution margin } & 500,000 \\\hline \text { Less: fixed expenses } & \underline{300,000} \\\hline \text { Operating income } & \$ 200,000 \\\hline\end{array}$
What is the company's margin of safety percentage,rounded to the nearest whole percent?

• A) 42%.
• B) 40%.
• C) 17%.
• D) 20%.