Xiong Corporation Makes a Product That Sells for $130 Per

question 7

Essay

Xiong Corporation makes a product that sells for $130 per unit. The product's current sales are 14,000 units and its break-even sales are 10,220 units.
Required:
Compute the margin of safety in both dollars and as a percentage of sales.

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Definitions:

Double-Declining-Balance Method

A method of depreciation that provides for a declining periodic depreciation expense over the expected useful life of an asset.

Unamortized Premium

The portion of a bond's premium that has not yet been amortized or reduced over time through periodic charges to income.

Straight-Line Method

A method of calculating depreciation that allocates an equal amount of an asset's cost to each year of its useful life.

Maturity

The date on which a financial obligation or investment becomes due for payment.