Taizhong Semiconductor Company mass produces several common computer chips. Type A sells for $1.20 per unit. Variable cost is $0.95 per unit and the fixed costs are $32,000 per month. Taizhong currently sells 140,000 units per month. How much is the margin of safety expressed in sales revenues?

Question

Quizplus · Accepted Answer

D) Calculations:
$1.20 - $0.95 = $0.25
$32,000/$0.25 = 128,000
128,000 × $1.20 = $153,600
140,000 × $1.20 = $168,000
$168,000 - $153,600 = $14,400

Taizhong Semiconductor Company Mass Produces Several Common Computer Chips