Which of the following statements is the correct calculation for the margin of safety in dollars?
A)The excess of projected (or actual)sales dollars over the break-even sales dollars.
B)The excess of projected (or actual)sales price over the break-even sales price.
C)The excess of projected (or actual)cost of sales in dollars over the break-even costs of sales in dollars level.
D)None of the answers is correct.

Question

Quizplus · Accepted Answer

The margin of safety is calculated as the excess of projected or actual sales dollars over the break-even sales dollars. This represents the amount of sales revenue that exceeds the minimum level needed to cover all costs and generate a profit, and provides a buffer against unexpected fluctuations in sales or expenses. Therefore, option A is the correct calculation for the margin of safety in dollars.

Which of the Following Statements Is the Correct Calculation for the Margin