Two companies with the same margin of safety in dollars will also have the same total contribution margin.

Question

Quizplus · Accepted Answer

Margin of safety in dollars is calculated by subtracting the break-even point from actual sales, while total contribution margin is calculated by subtracting total variable costs from total sales. Therefore, two companies with the same margin of safety in dollars can have different levels of total contribution margin depending on their variable cost structure.

Two Companies with the Same Margin of Safety in Dollars