The margin of safety is:
A) The difference between estimated sales and breakeven sales.
B) Not a useful measure for management in understanding the risk associated with a product line.
C) The amount sales can drop before the target profit is met.
D) How far sales must increase to earn a profit.

Question

Quizplus · Accepted Answer

The margin of safety is the difference between estimated sales and breakeven sales, which represents how much sales can decline before the company starts incurring losses.

The Margin of Safety Is