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A coffee shop has a total cost of £700 and a revenue of £1,600, what is their margin of safety?

Question

A coffee shop has a total cost of £700 and a revenue of £1,600, what is their margin of safety?

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Solution

The margin of safety is calculated by subtracting the total cost from the total revenue.

Step 1: Identify the total revenue. In this case, the total revenue is £1,600.

Step 2: Identify the total cost. In this case, the total cost is £700.

Step 3: Subtract the total cost from the total revenue to find the margin of safety.

So, £1,600 - £700 = £900

Therefore, the margin of safety for the coffee shop is £900.

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