If fixed selling and administrative expenses increase by $60,000 and sales remain at the $2,000,000…

Pricher Corporation”s income statement for last year appears below:

Sales

 

$2,000,000 

Cost of goods sold:

 

 

Direct materials

$500,000

 

Direct labor (variable)

150,000

 

Variable manufacturing overhead

50,000

 

Fixed manufacturing overhead

600,000

 

Gross margin

$500,000

1,300,000

Selling and administrative expenses:

150,000

700,000

Variable

100,000

 

Fixed

300,000

400,000

Net operating income

 

$ 300,000

If fixed selling and administrative expenses increase by $60,000 and sales remain at the $2,000,000 level, what is the margin of safety in sales dollars:

A) $300,000

B) $200,000

C) $500,000

D) $400,000