Margin of safety - 20%

Fixed costs - $900,000
Contribution margin - 25%
Break-even - 12,000 units

Calculate actual total sales revenue.

I have been trying this question out in many different ways however I still cannot solve it. Could someone show me the formulas and steps I should be using>

To calculate the actual total sales revenue, we need to consider the break-even point and the margin of safety.

First, let's calculate the break-even point in terms of dollars:

Break-even point (in units) = Fixed costs / Contribution margin
Break-even point (in units) = $900,000 / 0.25 (25% expressed as a decimal)
Break-even point (in units) = 3,600,000 units

Now, let's calculate the margin of safety in dollars:

Margin of Safety = Actual units sold - Break-even units
Margin of Safety = 12,000 units - 3,600,000 units
Margin of Safety = -3,588,000 units (negative indicates a loss)

Given that the margin of safety is -20%, we can calculate the actual total sales revenue as follows:

Margin of Safety (in dollars) = Margin of Safety as a percentage * Break-even revenue
Margin of Safety (in dollars) = -20% * ($900,000 / 0.25)
Margin of Safety (in dollars) = -0.20 * $3,600,000
Margin of Safety (in dollars) = -$720,000

As the margin of safety is negative, it indicates a loss, which means that the actual total sales revenue can be calculated by subtracting the margin of safety from the break-even revenue:

Actual total sales revenue = Break-even revenue - Margin of Safety (in dollars)
Actual total sales revenue = $900,000 - (-$720,000)
Actual total sales revenue = $900,000 + $720,000
Actual total sales revenue = $1,620,000

Therefore, the actual total sales revenue is $1,620,000.