Corey Company Has a Margin of Safety Percentage of 20

question 82

Multiple Choice

Corey Company has a margin of safety percentage of 20%. The break-even point is $200,000 and the variable costs are 45% of sales. Given this information, the operating profit is:

• A) $27,500.
• B) $18,000.
• C) $22,500.
• D) $22,000.

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Definitions:

Excess Capacity

A situation in which a firm is producing at a lower scale of output than it has been designed for, often leading to inefficiency and increased costs.

Over-Differentiation

The excessive creation of variations of products that confuse rather than satisfy consumer needs.

Peak Efficiency

The state of operating at maximum productivity with the lowest waste of resources or effort.

Non-Price Competition

Strategies used by companies to attract customers based on factors other than price, such as quality, service, and brand loyalty.