The margin of safety is the difference between

Question

Quizplus · Accepted Answer

The margin of safety is defined as the difference between expected level of sales and the break-even point in revenue dollars. This measures how much sales can decline before the company reaches its break-even point. Option A is incorrect as it calculates the total contribution margin, not the margin of safety. Option C is incorrect as it compares two different types of profit. Option D is incorrect as it calculates the contribution margin per unit, not the margin of safety.

The Margin of Safety Is the Difference Between