KR Sales Had $1,200,000 in Sales Last Month

question 30

Multiple Choice

KR Sales had $1,200,000 in sales last month.The variable cost ratio was 60% and operating profits were $80,000.What is KR's margin of safety?

• A)$200,000
• B)$300,000
• C)$500,000
• D)Cannot determine with the information given.

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Definitions:

IRS

The Internal Revenue Service, a U.S. government agency responsible for the collection of taxes and enforcement of tax laws.

Reversing Temporary Difference

An accounting adjustment that reverses differences between tax and financial reporting over time.

Originating Temporary Difference

A difference that arises in a particular period between the book income and taxable income, which is expected to reverse in the future.

Municipal Bonds

Debt securities issued by municipalities or local governments to finance public projects, typically offering tax-exempt interest payments to investors.