6. The Margin of Safety is: a. The excess of budgeted or actual sales over budgeted or actual variable expenses. b. The excess of budgeted or actual sales over budgeted or actual fixed expenses. ( The excess of budgeted or actual sales over the break-even volume of sales. d. The excess of budgeted net operating income over actual net operating income. 7. Ofarrell Corporation, a company that produces and sells a single product, has provided the following information for the month: Sales (5,000 units) $205,000; Variable expenses $125,000; fixed expenses $62,400. If relationships remain the same and 6.200 units are sold next month, the net operating income for next month should be closest to: a. $29,400 c. $36,800 b. $33,600 d. $39,300 e. None of the above. The answer is 8. Minist Corporation sells a single product for $15 per unit. Last year the company's sales revenue was $225,000 and its operating income was $40,500. If fixed expenses totaled $72,000 for the year, the break-even point in unit sales was: a. 9,600 C. 12,800 b. 11,600 d. 14,400 e. None of the above. The answer is 9. Company A and Company B have the same level of Net Income Company A has a higher proportion of fixed expenses to variable expenses than Company B. [Refer to Chapter Emphasis) a. Company A will have a lower level of Degree of Operating Leverage than Company B. b. Company A will have the same level of Degree of Operating Leverage than Company B. c.) Company A will have a higher level of Degree of Operating Leverage than Company B. 10. Arthur Corporation has a margin of safety percentage of 25% based on actual sales. The break-ever point is $300,000 and the variable expenses are 50% of sales. Given this information, the actual profit is: a. $50,000 $70,000 b. 60,000 d. 80.000 e. None of the above. The answer is