Staley Co Manufactures Computer Monitors

question 83

Multiple Choice

Staley Co. manufactures computer monitors. The following is a summary of its basic cost and revenue data:Assume that Staley Co. is currently selling 600 computer monitors per month and monthly fixed costs are $80,000.
Staley Co.'s margin of safety ratio (MOS%) if 600 units are sold would be (round intermediate calculation up to nearest whole number of units) :

• A) 33.4%.
• B) 17.7%.
• C) 20.5%.
• D) 19.5%.
• E) 79.5%.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, labor, and both variable and fixed overhead—as part of the cost of a finished product.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overheads - in the cost of a product.

Variable Costing Income (VCI)

An accounting method that includes only variable costs—costs that change with production level—in calculating net income.

Full Costing Income (FCI)

A method of accounting that allocates all fixed and variable costs to products, operations or projects to determine profitability.