Alpha Corporation's fixed costs total $10,000, while Beta Corporation's fixed costs total $12,000 for the same period of time. Therefore, Beta has a higher margin of safety than Alpha.

Question

Quizplus · Accepted Answer

Margin of safety is the difference between a company's actual sales and its break-even point. It is not determined by fixed costs alone, but also by the sales volume and contribution margin. Therefore, we cannot determine whether Beta has a higher margin of safety than Alpha based solely on their fixed costs.

Alpha Corporation's Fixed Costs Total $10,000, While Beta Corporation's Fixed