The margin of safety in dollars is calculated by:
A) deducting the contribution margin from expected sales.
B) deducting break-even sales from expected sales.
C) deducting total variable cost from sales revenue.
D) deducting total fixed costs from sales.
E) deducting actual profit from expected profit.

Question

Quizplus · Accepted Answer

The margin of safety in dollars is the amount by which actual or expected sales exceed the break-even point. Therefore, it is calculated by deducting break-even sales from expected sales. This represents the amount of sales that can be lost before the business incurs a loss.

The Margin of Safety in Dollars Is Calculated By