In the Current Year, Becker Sofa Company Expected to Sell

question 96

Multiple Choice

In the current year, Becker Sofa Company expected to sell 12,000 leather sofas. Fixed costs for the year were expected to be $8,400,000; unit sales price was budgeted at $4,600; and unit variable costs were expected to be $2,200.
Becker Sofa Company's margin of safety (MOS) in sales dollars is:

• A) $36,200,000.
• B) $42,600,000.
• C) $33,300,000.
• D) $46,700,000.
• E) $39,100,000.

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Definitions:

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or loss of value over time.

Indirect Method

A cash flow statement approach that adjusts net income for non-cash transactions and changes in working capital to calculate cash flow from operations.

Operating Activities Section

Part of a cash flow statement that shows the cash generated or used by a company’s core business operations.