The margin of safety _____.
A)equals planned unit sales less break-even unit sales
B)shows how actual sales differ from planned sales
C)is the sales price minus all the fixed expenses
D)is the same as contribution margin

Question

Quizplus · Accepted Answer

The margin of safety is the amount by which actual or expected sales exceed the break-even sales level. It is calculated as planned unit sales less break-even unit sales, which gives a measure of how much sales can decline before the company begins to incur losses. Therefore, option A is the correct answer.

The Margin of Safety _____