Which of the following statements regarding margin of safety is not correct?
A) If break-even point for sales increases, then a company's margin of safety will increase.
B) If the break-even point for sales drops, then a company's margin of safety will increase.
C) The margin of safety in sales dollars represents the difference between total sales dollars and break-even point in sales dollars
D) The margin of safety can be measured in both sales dollars and units.

Question

Quizplus · Accepted Answer

The margin of safety can be measured in sales dollars or in units and is the difference between actual, targeted, or projected sales and break- even sales. As break-even declines, margin of safety will increase.

Which of the Following Statements Regarding Margin of Safety Is