Danahy Corporation Manufactures a Single Product

question 162

Multiple Choice

Danahy Corporation manufactures a single product. The following data pertain to the company's operations over the last two years:

-What was the absorption costing net operating income last year?

• A) $50,000
• B) $48,000
• C) $52,000
• D) $56,000

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Definitions:

Margin of Safety

The difference between actual or expected sales and the break-even sales, measured to assess the risk of incurring losses.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Capital Intensive

Describes industries or businesses that require large amounts of investment in heavy machinery, equipment, or other capital assets to produce goods or services.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in meeting profitability targets.