Answer: current year’s sales = $ 1,200,000

Working notes for the above answer is as under

We have been provided with the information as follow

business had a margin of safety ratio of 20%,

variable costs of 75% of sales,

fixed costs of $240,000,

abreak-even point of $960,000,

operating income of $60,000

Now we will calculate  current year sales as follow

Margin of safety = Actual Sales – BEP Sales

20% = 100% -80%
We have been given in th sum that

break-even point of $960,000,

So current year sales

=960,000 / 80%

= $1,200,000