By what amount can sales decline before losses are incurred?

Question

Quizplus · Accepted Answer

The margin of safety is the difference between the actual or expected sales and the breakeven point. It indicates the amount by which sales can decline before losses are incurred. Therefore, option B is the correct choice. Option A (contribution margin), C (degree of operating leverage), and D (fixed costs) are all important cost and revenue concepts but do not directly answer the question of how much sales can decline before losses are incurred.

By What Amount Can Sales Decline Before Losses Are Incurred