Which of the following represents the margin of safetyin units?
A)The excess of projected (or actual)sales units over the break-even unit sales level.
B)The excess of projected (or actual)sales price per unit over the break-even sales price in units.
C)The excess of projected (or actual)cost of sales in units over the break-even costs of sales level in units.
D)None of the answers is correct.

Question

Quizplus · Accepted Answer

Margin of safety represents the excess of projected (or actual) sales units over the break-even unit sales level. It indicates the cushion available to the business to absorb any decline in sales without incurring a loss. Hence, option A is the correct choice. Option B and C do not correctly represent the margin of safety in units. Option D states that none of the answers is correct, which is not true as option A is the correct answer.

Which of the Following Represents the Margin of Safetyin Units