Asked by

Kevin Patulot
on Oct 15, 2024

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The margin of safety is the excess of:

A) Break-even sales over expected sales.
B) Expected sales over variable costs.
C) Expected sales over fixed costs.
D) Fixed costs over expected sales.
E) Expected sales over break-even sales.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the level of risk in missing sales projections.

Break-even Sales

The amount of revenue needed to cover total costs, both fixed and variable, indicating the point at which a company neither makes a profit nor incurs a loss.

  • Calculate and interpret the margin of safety and its significance in financial planning.
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Lisbeth QuinteroOct 19, 2024
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