Asked by
Kevin Patulot
on Oct 15, 2024Verified
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.
Verified Answer
LQ
Learning Objectives
- Calculate and interpret the margin of safety and its significance in financial planning.
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