A Company Makes a Single Product That It Sells for $16

question 112

Multiple Choice

A company makes a single product that it sells for $16 per unit. Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%. If the company's actual sales are $224,000, its margin of safety is:

• A) $32,000
• B) $96,000
• C) $128,000
• D) $192,000

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Definitions:

Price of Resource

The cost associated with securing a natural or economic resource for use in production or consumption.

Extraction Costs

Costs related to extracting natural resources from the ground, like mining or drilling activities.

Quantity Extracted

The amount of a resource or good that is removed from its natural setting or produced over a given period.

Shift from TC₁ to TC₀

Represents a change in total cost from one state (TC₁) to another (TC₀), often used in economic models to explain cost variations.