If a firm's forecasted sales are $250,000 and its break-even sales are $190,000, the margin of safety in dollars is:
A) $60,000.
B) $250,000.
C) $190,000.
D) $440,000.
E) $24,000.

Question

Quizplus · Accepted Answer

Margin of safety in dollars can be calculated as the difference between forecasted sales and break-even sales.

Margin of safety = Forecasted sales - Break-even sales
Margin of safety = $250,000 - $190,000
Margin of safety = $60,000

Therefore, the margin of safety in dollars is $60,000.

If a Firm's Forecasted Sales Are $250,000 and Its Break-Even