
The following pertains to Upton Company for the year ending December 31, 2022:

Budgeted Sales

$ 1,100,000

Break-Even Sales

720,000

Budgeted Contribution Margin

620,000

Cashflow Break-Even

210,000

Upton's margin of safety is: (CPA adapted)

Multiple Choice

$480,000.

$890,000.

$380,000.

$510,000.

The **Margin of Safety** is calculated as the difference between **Budgeted Sales** and **Break-Even Sales**.

The formula is:

\[
\text{Margin of Safety} = \text{Budgeted Sales} - \text{Break-Even Sales}
\]

Given:
- **Budgeted Sales** = $1,100,000
- **Break-Even Sales** = $720,000

Now, we can compute the Margin of Safety:

\[
\text{Margin of Safety} = 1,100,000 - 720,000 = 380,000
\]

Thus, **Upton's Margin of Safety** is **$380,000**.

### Correct answer: $380,000.

Would you like more details or have any further questions? 

Here are 5 related questions for further exploration:
1. What does the margin of safety represent in financial analysis?
2. How does Upton's margin of safety impact its risk profile?
3. How can break-even sales be calculated from costs and prices?
4. What strategies can a company use to increase its margin of safety?
5. How does cash flow break-even differ from standard break-even?

**Tip**: A larger margin of safety indicates a company can endure more sales declines before incurring losses!

The following pertains to Upton Company for the year ending December 31, 2022:

Budgeted Sales: $1,100,000
Break-Even Sales: $720,000
Budgeted Contribution Margin: $620,000
Cashflow Break-Even: $210,000

Upton's margin of safety is: (CPA adapted)

Multiple Choice
$480,000.
$890,000.
$380,000.
$510,000.

Learn how to calculate Upton Company's margin of safety for the year ending December 31, 2022, using the formula: Margin of Safety = Budgeted Sales - Break-Even Sales. In this example, Budgeted Sales are $1,100,000, and Break-Even Sales are $720,000, resulting in a Margin of Safety of $380,000. Ideal for finance students and professionals.

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