Company a Has a Higher Margin of Safety While Company

question 158

Multiple Choice

Company A has a higher margin of safety while Company B has a lower margin of safety. Company A would be considered ________ Company B when considering only margin of safety.

• A)more risky than
• B)less risky than
• C)to have the same level of risk as
• D)Unable to judge based on margin on safety.

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Definitions:

Conversion Costs

Conversion costs are the total costs required to convert raw materials into finished products, typically including both direct labor and manufacturing overhead.

Beginning Work

Refers to the value of the work-in-progress at the start of an accounting period.

Assembly Department

A section within a manufacturing facility where components are assembled into final products.

Process Cost System

An accounting system used to track and allocate costs of production by processes or departments, commonly used in industries where goods are produced in a continuous process.