If variable costs go down,and all other factors remain the same,the margin of safety will become larger.

Question

Quizplus · Accepted Answer

If variable costs decrease, the breakeven point will decrease, which means the level of sales required to cover all costs will be lower. This results in a larger margin of safety, which is the amount by which sales can fall below the breakeven point before a business incurs a loss. Therefore, the statement is true.

If Variable Costs Go Down,and All Other Factors Remain the Same,the