The following monthly data are available for the Eager Company and its only product:
What was the margin of safety for the company for March?
A) $315,000.
B) $225,000.
C) $135,000.
D) $495,000.Margin safety = 7,000 * $75 - 180,000/.60 = $225,000.

Question

The following monthly data are available for the Eager Company and its only product: 
What was the margin of safety for the company for March?
A) $315,000. 
B) $225,000. 
C) $135,000. 
D) $495,000.Margin safety = 7,000 * $75 - 180,000/.60 = $225,000.

Quizplus · Accepted Answer

The margin of safety for the company for March is $225,000, which means the company is able to cover its fixed costs and still have $225,000 left over as a buffer. Therefore, option B is the best choice as it shows that the company has a comfortable cushion to cover its fixed costs and still make a profit. Option A and D are incorrect as they overstate the margin of safety, and option C is too low and does not accurately reflect the level of comfort the company has in covering its fixed costs.

The Following Monthly Data Are Available for the Eager Company