Which of the following can be considered a measure of risk in cost-volume-profit analysis?
A)margin of safety
B)contribution margin ratio
C)contribution margin
D)fixed cost

Question

Quizplus · Accepted Answer

Margin of safety is a measure of the amount of sales that can be lost before a company reaches its breakeven point, indicating the level of risk associated with sales. A higher margin of safety implies a lower risk, while a lower margin of safety implies a higher risk. Contribution margin ratio and contribution margin are measures of profitability and are not direct measures of risk. Fixed cost is a cost that does not change with the level of sales and is not a measure of risk.

Which of the Following Can Be Considered a Measure of Risk