What is the margin of safety in dollars?
A) planned net income minus actual net income
B) planned revenue minus actual expenses
C) actual revenue in dollars minus planned revenue in dollars
D) planned sales in dollars minus break-even sales in dollars

Question

Quizplus · Accepted Answer

The margin of safety is the difference between the actual sales and the break-even sales in dollars. Therefore, option D is the correct answer. Option A measures the variance between planned and actual net income, option B measures the variance between planned revenue and actual expenses, and option C measures the variance between planned and actual revenue.

What Is the Margin of Safety in Dollars